Just Because You’re a Student Doesn’t Mean You Can’t Have Good Credit

Official blog of Refresh Financial

Just Because You’re a Student Doesn’t Mean You Can’t Have Good Credit

student credit card

Maintaining and building good credit can be a stressful endeavour, especially if you’re a student! Even with a student credit card, the limitations of spending might make it seem even more difficult. But, it is not an impossible task!

If taken seriously, many students are able to come out of their degree with good credit, despite inevitable ups and downs their finances will face as a student. And you can too, with these simple tips to help keep your finances on track. These tips take into account the craziness of student life as well limited income. We don’t want building your credit to interfere with your schooling, and it shouldn’t have to!

Pay all your bills on time

Late payments will affect your credit in a negative way. One of the simplest ways to manage your credit is by paying all your bills on time. As a student, you may not have a ton of bills to keep track off, but that doesn’t mean you shouldn’t. Considering automating your monthly bill payments so you don’t have to worry about missing them or not having enough funds!

Some bills you might need to keep in mind:

  • Cellphone
  • Internet
  • Streaming service subscriptions
  • Any computer software used for your studies
  • Student life fees for campus events and services
  • Transit passes or car payments

Keep an eye on your balance-to-limit ratio

A high balance is the last thing you want on your student credit card. You should definitely avoid maxing out your credit and try keeping your balance at 30% of your credit limit.

A lot of aspects of student life are expensive, such as purchasing supplies or even participating in a social life and meeting new people! It’s more than okay to use your student credit card to spend on these things, but you have to do so wisely. Shop discount or used textbooks, and sell your old ones for cash to pay off the costs of your new books. This will help keep your balance low and paid off accordingly!

As far as your social life goes, seek out free events on campus or go to restaurants, museums, galleries, theatres, or whatever you might be interested in, that offer student discounts to save some money!

Create a budget

To avoid unnecessary spending or a sudden cash shortage, create a budget! This way, you don’t get carried away with tapping your student credit card at every coffee shop on campus.

Creating a budget is simple: determine your average monthly income and expenses, and divide your income up based on wants and needs. A good budget should eventually create room for you to have more spare cash.

As a student, you should prioritize your needs like rent, bills, groceries, and school expenses, before incorporating wants into your budget.

Avoid having too many accounts

It can be intimidating to start handling your personal finances on your own. And for students, the first time you really have to do this is when you start college or university. But, the answer isn’t to open up a bunch of credit accounts to spend money with. Having too many credit accounts that carry balances can be a sign of financial distress and will not help your credit.

Good credit takes time to build

You have to be patient and give it the time it needs. Especially considering that if you’re a student, you’re probably at the beginning of your credit journey. Even if the journey is a bumpy road at first, that doesn’t mean it can’t improve. In fact, that’s exactly what time is for.

You shouldn’t close your existing credit accounts but rather give them the time they need to grow into good credit. The more time you spend utilizing credit, the more time to have to exhibit good money habits which is ultimately what builds your credit.

A longer history of credit is great for improving your credit score, and you’re just getting started!

Limit the amount of times you make credit inquiries

You should avoid submitting numerous requests for credit inquiries, as this can sometimes affect your credit in a negative way.  But, of course, sometimes it’s necessary, for instance, when you’re looking to rent a new apartment. Talking to an employee at your bank when you need to check your credit is a great idea considering we all have to do it sometimes! When you’re a student, life is constantly changing. And thing like housing applications and loan applications require your credit score, so you’re bound to run into needing to check it. Just don’t get too caught up in those numbers!

Don’t be nervous to use your student credit card!

Your credit card is not a villain; it is a tool. It can help you track your spending, and earn you rewards or cash back! Use it! While you have to do so in a smart way, it doesn’t mean you should be scared of your student credit card. In fact, to build good credit you need to use your credit card.

Decide what monthly expenses you should charge to your student credit card and then automate credit card bill payments if you can. Just make sure you are tracking your spending so you don’t spend more than you can afford. Student life is crazy busy, so pencil in time every month dedicated to tracking your spending and looking over your credit. That way you have a set time outside of your other obligations to really check in with yourself and make sure your credit is healthy.

Pay off your debts

You may feel like your credit will never improve. Heck, you might even consider yourself the poster person for a broke student with limited job prospects, wondering if you can ever salvage my credit. Rest assured, you can and you will, as long as you are diligent about maintaining credit health and develop a consistent course of action for paying off debts.

Here are a few ways you can start to pay off your debts:

  • Cut interest rates by transferring the balance to a line of credit.
  • Make lump sum payments when you earn and/or are gifted unexpected cash.
    • Starting a side hustle like tutoring or even selling old textbooks, is a great way to do this.
    • Seek out paid research studies on campus or help graduate students with their research - it rarely takes up much of your time!
    • Essay editing services are always needed, so put up some posters on campus to offer your services and save some extra cash!
  • Use budgeting apps or spreadsheets to keep your finances on track.
  • Get a work/study job position to earn money while still balancing your classwork.

Get help from a loan!

The bulk of your financial decisions should be made with the intent of maintaining good credit. While there are loans dedicated specifically to building your credit, you can make any loan help you build credit. Be aware of the loans you have taken out. You’re most likely to have student loans and the debt from them is probably already on your mind. Track their balance and impending monthly payments so you can be more equipped to pay them off and maintain your credit when the time comes!

Why you should care about your credit?

After all this talk of maintaining good credit, you’re probably wondering why you should care about this. In short, having bad credit limits your access to financial opportunities and other life necessities. This includes…

  • Applying for rental housing
  • Applying for a job
  • Applying for loans or a mortgage
  • Renting a vehicle
  • Good interest rates
  • Credit cards

Student life is usually the step before really entering the work world and your plans for the future. And you don’t want bad credit to limit your opportunities after all your hard work!

As students, we can feel limited in our financial capabilities. But there are things that we can and should take control of (like our credit of course!) With a combination of budgeting, earning, and increasing your financial knowledge (and if you’re reading this post), you’ve already taken an amazing step toward building and maintain your credit.


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