Credit 101: Why is it important to build credit as a student?

As a student, you’ve got a lot on your mind… Between balancing a heavy course load, having a semblance of a social life and working a part time job, the last thing you’re worried about is building your credit. You’ve just got so much else on your mind. What you might not realize though, is that your credit impacts much more than big adult issues like buying a house or a car.

As a student, having poor or no credit might impact your ability to switch cell providers or transfer utilities into your own name. Beyond that, building and establishing a good credit history is crucial for scoring favorable terms/rates on loans, renting your own apartment, securing low insurance premiums, and even landing your dream job. After graduation is when most of these changes will be in full effect so having your credit already established can save you time, money and disappointment. Without an established credit history, you may be required to put down a higher deposit, or pay a higher interest rate. In some cases, you may even have to wait until your credit is more established. Although lenders all have different requirements, usually two years’ worth of credit history is a safe bet.

I know it’s tempting to rack up your card when you’re living as a starving student. It’s easy to make only minimum payments, or avoid paying all together, and defer paying down the balance to your future self. While subsidizing your expenses with a credit card might keep you from living off ramen in the short term, it can seriously impact many aspects of your life long past the day you walk across the stage.