How College Grads (or Anyone) Can Build Credit

The currency of the college years is good grades. Once you graduate, your credit score often dictates much of your financial path going forward. There are several entities who will look at your credit and potentially make decisions based on your history:

  1. Your Employer
  2. Insurance Companies
  3. Landlords
  4. Lenders

So if you are just starting out, or even if you are starting over, here are some really useful tips to help you build your credit:

  • Think before you borrow. Just because someone offers you a loan doesn’t mean you have to take it. After all, the more interest you pay, the less money you have.
  • When you do borrow, only borrow what you need and only utilize the right type of credit for your situation. There are two types: open-end (like a credit card) and closed-end (car loan & mortgage). Having a variety of types will help increase your score.
  • If you can’t get credit, consider using a credit union where you may qualify for financial products you wouldn’t otherwise get elsewhere. If this doesn’t work, you can always fall back on a secured credit card where you have a security deposit that guarantees your borrowing. Finally, if all else fails, a co-signer may help.
  • When you do get a credit card, don’t use more than 30% of your available credit.
  • Always pay your bills on time. Missed payments will make a huge ding in your score.

Bottom line: there are several ways to build your credit, but always make sure you follow these tips to keep you on track.

About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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