Establish a Credit History


Most financial advisers suggest that undergraduate students start establishing a credit history while still enrolled. Getting a credit card is a popular way to establish credit and there are good reasons to do so. But there are also serious pitfalls.

Benefits of using a credit card:

“A bank is a place that will lend you money if you can prove that you don’t need it.”
Bob Hope

  • Convenient way to make purchases and track spending
  • Safe way to avoid carrying too much cash
  • Making on-time monthly payments can help establish credit
  • Certain cards may offer benefits, such as cash back rewards or etc.

Hazards of using a credit card:

  • Easy to impulse shop and over spend
  • Not paying on time can hurt your credit score
  • Paying only minimum payments can hurt your credit score
  • Charging up to your credit limit and paying only the minimum may lead to years of debt

Establishing a good credit history while in college makes it easier to access credit after graduation for major expenditures such as renting an apartment, buying a car, buying a home, etc. Be vigilant in budgeting monthly expenses while you are still in college so you can control what you spend and make your credit card payments on time.