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Firm Foundations of Credit
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Lauren (She/Her)
Financial Educator
Posted February 3, 2022
While home ownership, car payments, and full time careers all may seem like far away thoughts, building your credit score now will give you more options and flexibility when that season of life comes. As college students, we can work on this without drastically changing our existing habits. Building a higher credit score can open doors for you, so start early.
Credit cards are a tool
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Some of us grew up being told that credit cards can lead to mountains of debt. While this may be the case for some, it does not have to be for you. Credit cards are not inherently bad. In fact, they are a great tool for building credit. Not to mention, they are the only loans that you can avoid accruing interest on if you pay your bill in full each month. By using your credit card like a debit card, only spending what you have, and paying it off at the end of each month, your credit score will begin to get established in no time!
Plan now, save later
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Another key reason to start building your credit as early as possible is because it will set you up for more financial success later in life. After graduation, many students look to buy or lease a car. Your credit will impact what kind of interest rate you will receive on your loan, and the higher your score, the lower the rate. With the money you save on your monthly car payments, you can focus on things that are most important to you such as groceries, gas, or even fun activities with friends and family.

Similarly, your credit will impact the rates you get on a mortgage. Housing is generally a person’s largest monthly expense. If your interest rate is even one bracket lower, it can save you thousands of dollars over the course of your life.
Credit can impact your career
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What many people don’t know is that your credit can impact your job opportunities. Many employers will pull a potential candidate’s credit score when considering whether or not to extend an offer. While this factor generally will not make or break your chances of getting the role, it is an opportunity to show your potential employer that you are responsible with your finances. This means that you will be responsible with theirs too and they can invest in you.
Start today
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Finally, it’s never too early to learn healthy financial habits. Many of the actions that will increase your credit score are things that will help you to be more prosperous and stable. Furthermore, in your earlier years, the stakes are much lower, as often we have and less responsibilities.
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While much of this may not seem too important now, credit has magnifying implications as we go on further in life. Whether you start out with a credit card or a small personal loan for school, having a positive credit history can set you up for success down the road. The earlier you start, the sooner you will see the benefits of your discipline and may have more freedom to do what you want financially.
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