How to get a high credit score

How to Get High Credit Score in College

One of the most critical things in this world today is your credit score. You have to have it for housing loans, credit cards, car loans, school loans, etc. Your credit score impacts almost everything in life. Often, a problem facing college students is getting a good credit score, or even for that fact, getting credit history can be difficult for them. The average credit score of people between the ages of 18 and 24 is 630, which, while is not a bad score, it still isn’t good either. Another challenge is that it is probably one of the most dangerous things you carry in your wallet. Without even realizing it, you could take on thousands of dollars of debt and bury yourself in unnecessary debt.

My Journey to Good Credit

When I first got to college, I decided I wanted to apply for one, and after learning how I was able to get one. But I knew I had to be careful; I didn’t want to end up with a mountain of debt and accumulate thousands of dollars worth of interest on it. So I had to make a plan for how I was going to use it. While I did make a few mistakes along the way, I was always able to pay off the card at the end of the month. Because of that continued focus on making sure I paid off everything on it, I ended up with a credit score of 733 by my senior year. I am now on track to a credit score of 800, by following the steps down below.

How to get a high credit score

Warning

Understand before you can take on this challenge that getting a credit card is a heavy responsibility. It isn’t free money, you will have to pay it back, and if you pay it back late frequently, you will find that interest on credit cards aren’t your best friend. You can look up horror stories of students piling on credit card debt with their student loan debt. Those people at the credit companies are not your friends. Those points won’t help you; more than likely, you will never use them. These will require discipline and self-restraint. But if you do this right, it will help you greatly in the future, and you will be happy you did it.

How is your Credit Score Determined?

To get a high credit score, you have to understand how your credit score is determined. Your credit is broken down into several categories that are each weighted differently. If you can understand each of these categories, you are on your way to getting a higher credit score.

Payment History

Credit companies will look into past payments. They will see if you have paid your debts on time consistently or if you have a history of paying them late or even not paying them at all. 

Amount Owed

You are a liability to the company, and the more you use, the more liable you become. That’s why they will lower your credit score if you use more than a certain amount of your available credit. A lot of times, you will find that magic number to be 25%. So remember, never pass 25% of your available credit.

Length of Credit History

Someone who has a 20-year record of paying their bills on time will have a better history than someone who has been paying their bills early the past two years. How long you have had your credit accounts, then they might look at the age of it and see how much you use it. There is no getting around this part. Creating a good credit score and history is just a waiting game.

How to get a high credit score

Credit Mix

FICO will look at a combination of your credit, ranging from car payments, mortgages, installment loans, etc. Any time you paid things with debt or a payment plan, they are going to look at to see whether or not you paid back what you owe.

New Credit

Every time you apply for credit, that company will open up your credit history. (They will look at different things for college students, which may vary depending on the card you apply for.) Be Careful, and if you apply for another credit card and fail, your credit score could go down. Can be especially damaging if you get rejected multiple times.

Categories Impact

Each area has a different percentage of how important each category is in determining your credit score.

  1. 30% goes to amounts owed
  2. 10% goes to new credit
  3. 15% Length of Credit history
  4. 35% goes to payment History
  5. 10% goes to credit mix

Credit Scores

Your Credit Score can range from 300 to 850

  1. Excellent Credit 750+
  2. Good Credit 700-749
  3. Fair Credit 650-699
  4. Poor Credit: 600-649
  5. Bad Credit: below 600

Apply for a Credit Card

Applying can be tricky, especially in college. You’re just now entering the real world and just figuring out how to be a somewhat functioning adult. Now you are trying to adult even more by applying for a credit card.

Thanks to the Card Act of 2009, credit card issuers are effectively banned from offering merchandise on campus. Also, Adults between the ages of 18 and 21 now have to show a way of repaying any loans they might accumulate before they are given a credit line. 

Look for secured credit card lines with as little as $49 and no more than $200; you can open a credit card line up. The cash you give the company acts as collateral.

What are you going to put on your credit card?

If you use that card on everything, you will end up spending more than you have, and that’s what we want to avoid here. Figure out one or two things that you will put on the credit card. Some good ones to consider are gas and groceries. But one thing I did that helped a lot was when I wanted to make a big purchase. I would save up the money for the product, and once I had it in cash, I would put it on the credit card and pay it off the very next day. 

Determine out the max amount you will put on your card.

Figure out what your max is and what you are willing to put on the card. It shouldn’t be your credit limit. In fact, you want to try to avoid using more than 25%; companies will penalize you for that and end up affecting your card. I would budget to use around 20% of your credit card at max to leave some safety areas for you. Figure out what the number is and declare that you will not spend a penny over the decided max you have created. 

Please note if you have multiple credit cards, then you are going to want to budget it differently. Say you have three credit cards (which if you are in college, you really shouldn’t), and you have a total of $5,000 credit limit altogether, then you never want to pass $1,250 between the three cards. If you do so, it is more than likely your credit score will drop significantly.

Always have cash ready to pay off your card

Make sure that by the end of the month, every month, you have the money to pay off that credit card. In reality, you want to have the money set aside for this at the start of every month. That way you don’t have to worry, but if you can’t do that, it’s ok. Just make sure you budget for it properly and get prepared to pay it off by the end of the month. If you don’t know how to budget check out this article here.

Final Thoughts

Finally, remember that a credit card is a double-edged sword. It can help you more than you can ever imagine, but at the same time, it can destroy you without a moment’s notice. Many lives have been destroyed because of credit card debt. However, if you follow these steps in this article, you’ll never have to worry about that problem.

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