Consumer Alert: Protecting Your Cash and Credit in College. Part 1: How to build a credit history
ROCHESTER, N.Y. (WHEC) — Your consumer alerts this week are all about protecting your cash and credit in college.
We talk to our college kids about drinking, drugs, and driving safety. But if you’re in college or about to be has anyone talked to you about the fact that unpaid tuition can affect your credit score or the difference in refinancing versus consolidating student loans?
No one talked to me, but quite frankly, I don’t know that I would have listened. After high school graduation, I thought I knew it all. My friends and I believed the wind was in our sails and we were on the way. I had gotten scholarships and had a college job lined up. I had a handle on the whole money thing, right? That’s what I thought. But a picture of me as a college sophomore is undeniable proof I didn’t know a thing because I actually thought my 80’s hair looked good.
And the only thing that came close to the height of my hair was the accumulation of my credit card debt. The experts with Experian say the key in college is building a credit history while avoiding debt. Rod Griffin, the Senior Director of Consumer Education and Advocacy at Experian stresses that building a credit history in college is important.
“You want to be able to get that job when you graduate, and people don’t realize that having a good credit history will help you establish your life independently the day after you get that diploma,” Griffin said. “When you apply for an apartment to rent, sign up for those utilities, get that cell phone bill, and perhaps even apply for a job that credit report can play a part."
So how do college students begin to build a credit history?
"Maybe have someone add you as an authorized user to their account so you’re establishing that credit history,” Griffin said. “Being an authorized user on a credit card is very safe for the authorized user because you are not responsible for the debt."
Your bank or credit union can also help you build credit
"If you open what we call a secured account for example with a bank, you deposit a bit in savings and they’ll issue you a credit card,” Griffin explained. “So a bank or a credit union can help you establish that credit history so you can actually start savings and a bit of credit. I always warn students if you have to use credit a little bit and perhaps have a credit card for emergencies, but emergencies are not pizza and beer on Friday night."
Griffin also explained that a new program called Experian Boost is perfect for college students who are trying to build credit. It allows you to build credit for bills like your streaming services, utilities, and phone service. You can also opt out when you choose. Of course, it’s critical that you pay these bills on time so you’re building a good credit history.
On Tuesday, we’ll discuss unpaid college tuition and your credit score.