What Credit Score Should College Students Try to Get?
A credit score is like a grade that shows how well you handle money. It shows if you’re able to pay back the money you borrowed. Some jobs even look at it to see if you’re responsible. College students usually don’t have much credit history. But don’t worry! While you’re in college, you can begin to build your credit. If your credit score is good while you’re in college, it might make it simpler for you to buy your first car or get your first credit card.
What’s seen as a good credit score for college students?
For college students, it’s good to have a credit score of 670 or higher. Credit score numbers are generated by companies called credit rating agencies. They give scores ranging from 300 to 850. Here’s how they sort them out:
- Poor (300-579)
- Fair (580-669)
- Good (670-739)
- Very Good (740–799)
Your score depends on how well you’ve used credit before and how you’re using it now.
What’s the average college student credit score?
Credit Karma says that the average credit score for college students and young adults aged 18 to 24 usually has an average credit score of 563, which is considered “poor.” With this score, it might be tough to get into many apartments, and if you’re looking for a car loan, the interest rate could be really high, maybe even 20 percent or more.
Getting a cell phone contract might also be tricky, and you might need to pay a deposit of $150 or more. But if that score goes up by 100 points to 663, things get much easier—you’d have better chances of getting a place to rent, a car loan, and a cell phone service without all the extra hassle.
Factors that Affect Your Credit Score
Discover what sorts of elements can change your credit score and understand how they might affect your financial situation.
Payment History
Making sure you pay your bills on time is very important for your credit score. When you borrow money, like for a loan or a credit card, lenders want to see if you’ll pay it back on time. They look at your past payments to figure out if you’re reliable with money. If you’ve always paid your bills on time, it shows that you’re good at meeting your financial responsibilities.
But if you’ve missed payments or paid late, it can hurt your credit score because it makes lenders worry that you might not pay them back too. As a college student, it’s crucial to always pay your bills on time to keep your credit score in good shape!
Credit History
How long you’ve been using credit is also really important for your credit score. It shows if you’ve been good with your finances for a while. They look at when you first got credit, how old your oldest account is, and how long you’ve had all your accounts. Usually, if you’ve been using credit wisely for a long time, your score will be better.
Credit Utilization
Credit utilization is basically about how much of your available credit you’re using. It’s like if you have a jar of cookies and you’ve eaten some already, that’s your credit used up. They figure it out by dividing how much credit you’re using right now by how much you could use total. If you use too much of your credit, it could mean you’re relying on it too much and might have trouble paying it back. That might lower your credit score.
The advice is usually to keep how much you’ve used to less than 30% of what you could use in total. So, if you have $100 worth of credit, try to keep what you’ve used to less than $30. That way, you’re not using too much and you’re showing you can handle your money responsibly.
Credit Mix
Having different kinds of credit, such as car loans, school loans, credit cards, and mortgages, can make your credit score better. When you have a mix of these, it shows that you’re good at handling different financial situations. But this only counts for a little bit, just 10%, of your whole credit score.
So, it’s not a good idea to take out a loan just to try to make your credit score better. It’s best to concentrate on making sure you pay your bills when they’re due and using your credit sensibly. That way, your score will go up naturally without having to take on extra debt.
Credit Applications
When you apply for new credit, like a credit card or a loan, credit agencies take a look. They want to see how many accounts you’ve opened recently. Every time you apply, it’s like a little check on your credit called a “hard inquiry.” Having many new accounts or making lots of inquiries can harm your credit score. It’s because it might seem like you’re trying to borrow too much, which could mean you’re having trouble with money. So, it’s better to be careful about opening too many new accounts or applying for credit too often.
Checking Your Credit Score
It’s easy to check your credit score. If you’re a student and you have a bank account or a credit card, you can often find a credit check option in their apps. You can also find lots of apps and websites that let you check your score for free. You can also go directly to a credit rating agency’s website.
The most important score you should know is your FICO score, which is used by many lenders and credit card companies. You can get it from the Fair Isaac Corporation website by paying a fee. And don’t worry, checking your score this way won’t hurt it at all!
Aim a High Credit Score for Better Financial Opportunities
Do you want to take control of your financial future? The best way is to start understanding your credit score and how it impacts your opportunities. From paying bills on time to managing different types of credit, small steps can lead to big improvements. Study these factors and responsibly use your credit today!