Ways High School and College Students Can Build Up Credit

June 2023credit score indicator

It’s never too early to start building a strong credit history. A good credit score can help you pass employment background checks, get you approved for apartment leases, qualify you for lower interest rates on student loans, or help you buy a car. And because your credit score is heavily impacted by credit history, establishing credit while you’re still in high school or college can make it easier to transition to the post-graduation life. Your options for building credit as a student may be more limited, but fortunately, there are some methods you can use.

Apply for a credit card

Credit cards provide one of the best methods for building credit because you don’t have to pay interest as long as you pay off the statement balance each month. A 2016 study from Student Monitor showed that college students with a credit card in their own name had a credit score 50 points higher on average than those without. As a student, you may not be able to qualify for a traditional credit card, but there are alternatives: student credit cards and secured credit cards. “Student credit cards are available to and specifically designed for college students,” says Ben Luthi, personal finance writer, in an article for myFICO. “If you can’t qualify for a student credit card, you may also consider a secured credit card, though that option requires an upfront security deposit to get approved.”

Get added as an authorized user

If you are under 18, one of your options is to get added as an authorized user on an adult’s credit card. Though you won’t be the primary cardholder, it will enable you to use that card, and the primary holder’s responsible card usage can boost your credit. There are some caveats, though. “Not all card issuers report authorized user accounts to the credit bureaus, so check first,” says U.S. News personal finance writer Kim Porter. And remember that late payments on the card can hurt both your credit as well as that of the primary cardholder, regardless of who is responsible.

Make interest-only student loan payments

You typically don’t have to pay off your student loans until about six months after you graduate, but making early interest-only loan payments can greatly enhance your financial life, and not just because of credit score. As Luthi points out, “[it] will not only positively affect your credit history but will also keep the interest from capitalizing and adding to your student loan balance.”

Get your rent payments reported to credit bureaus

If you are commuting to college from an apartment you lease, rent and utility payments are traditionally not included in credit reports. However, companies like Rental Kharma, Rent Track, and PayLease will report your rent and utility payment activity to credit bureaus, helping you build your credit. “The newest FICO Scores will incorporate this information if it shows up in your credit file,” Luthi says. However, there are some limitations: the lease must be in your name, your landlord may need to sign up for the services, and there may be transaction fees.

Building good credit takes time, and starting early can get you a leg up in the real world. For more advice on how to build your credit history, talk to a Personal Banker at any Waukesha State Bank office.