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The Good Life For Less: Give College Students A Little Credit

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(credit: Jupiter Images)

(credit: Jupiter Images)

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Back to school time is upon us. We usually think of little ones heading off to class, but there are lots of college kids who will be heading off to dorms and starting their lives as adults.

It can be an exciting time, but confusing too. Now they’ll have to juggle between the first taste of freedom from curfews and also balancing finances to pay for it all. Not to mention all those credit card offers they’ll be getting now that they’re “all grown up.”

Getting your first credit card is an important rite of passage and can help build your credit history, but some companies are moving away from the college student market. That’s good for those younger shop-a-holics who rack up a huge debt on frozen pizzas, clothes, and beer, but not as good for those just looking to build credit.

Never fear, Kinoli, Inc., a company behind many money-saving websites, shared some other ways to build credit without a typical credit card. Listen up college peeps, this one is for you.

• Open a Bank Account

Seems so obvious, but an account in your name makes all the difference. No more hiding cash away in the piggy bank you got from grandma. Your account won’t appear on your credit report, but some lenders may look at your account info to see if you’ve had a steady income or how long you’ve kept up a balance in the account. Not only that, it can teach you the basics of balancing a check book which will get you ready to pay off credit cards in full once you get one.

• Student Loans

For a fortunate few, you won’t need a loan, but for most, it’s a necessity. The good news is student loans have lower interest rates and you don’t have to pay back most of them until after graduation. The catch is you won’t start building credit on the loans until payments are due.

• Get A Co-Signer

If you need loans beyond what the U.S. Department of Education can provide you, you will likely need a co-signer. Parents or other close relatives are your best option. By having someone with an established credit history co-sign a loan or credit card application it will give you lower rates and a better chance of being approved. Bonus; it builds credit for both of you at the same time.

• Stay Steadily Employed

Your job history will appear on your credit report, so it looks better if you are stably employed with the same company, earning increases in pay each year. Of course, in college it’s pretty common to take on multiple jobs, part-time gigs, or temp work. Don’t put too much weight on this — if you’re making money that looks favorably on you.

• Pay Your Bills

This is the key to building credit and keeping your credit. Paying your bills on time will save you a world of worry — immediately and long term (like when you are trying to buy a car or house after college). The people at Kinoli, Inc. suggest canceling cable, pawning used video games or selling gift cards you haven’t used if you can’t cover your bills. Missing some payments can really impact your credit score and it takes a lot longer to build it back up than it will to destroy it.

• But I NEED The Card!

If skipping the credit card is unavoidable for you, remember to use that plastic with care. College students or those with little to no credit history often get the worst interest rates. But Kinoli, Inc. says PT Money has a list of some of the best cards for students.

Credit cards for specific stores are sometimes easier to get, but most carry high interest rates. Ideally, you should pay off the balance each month.

You could also try a secured credit card, where you make a deposit equal to your credit limit. Or, if you trust your parents to be financially responsible, you can ask them if it is possible to become an authorized user on their account (you don’t even have to use it). You won’t have the responsibility for the bill, but will still get the benefits on your credit report.

Know of any other deals or tips, share them with other ‘Good Lifers’ in the comment section. You can also read more money-saving blog posts here and text WCCODEALS to 84816 for a ‘deals of the week’ reminder.

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