Credit for College Students

Why Students Need Credit

You need to build credit to rent, lease or own things. If you plan on purchasing a car or home one day, you’ll need to start building credit now. The better your credit, the less you will pay in interest over your lifetime.

Credit for college students can be checked when you:

In most cases, your credit alone won’t get you approved for a private loan or an apartment lease. You’ll likely need a parent or relative to co-sign for you. This process can become frustrating when you can’t get money for school or a place to live on your own merit, especially if your parents and relatives don’t have good credit.

Credit for college students isn’t just about finding a co-signer to bail you out of every situation. Your co-signer takes on considerable risk and responsibility each time they help you. A co-signer’s credit is also impacted by the debt they take on with you, so be mindful of how many times you ask someone to assist you. By learning how to build credit, and establishing a positive credit history, you can start to qualify for credit-based products on your own.

Why Students Need a Co-signer

Most undergraduate students don’t have significant income, and haven’t had enough time to build a good credit history. If you need to borrow private student loans for college, your student credit history won’t be sufficient for lenders to loan you the money you need. You will most likely need to find a private loan co-signer to apply with you and be a responsible party on the loan. If you are having trouble understanding or identifying a co-signer for your private student loan, we’ve put together information to help you Find a Co-signer.

Remember, with the exception of the Grad PLUS Loan, student credit doesn’t matter for federal loans, like the Stafford Loan. You should always maximize federal loan funds before using credit-based private student loans.

How to Build Credit for College Students

As a college student, it’s important for you to understand how to build credit. You should always start by checking your credit history. You can get a free copy of your credit report every year at Make sure that all of the information being reported is correct; if it’s not, you should contact the credit bureaus and dispute the information.

If you are wondering where to start, here are some credit tips designed especially for college students:

  1. Open a student checking and savings account
  2. Carefully select a student credit card
  3. Start using your student credit card to make purchases, but don’t max out the card. Be sure to make payments, ideally in full, every month.
  4. Cell phone, electricity, and cable bills that you pay every month (on-time) can help establish a positive credit history
  5. Make sure you understand the payment obligations on all of your student loans for college. Your credit, and that of your co-signer, can be impacted if you don’t pay on-time.

What Impacts Your Credit Score

Although you probably don’t need to know every factor that impacts your credit, it’s important to understand how your actions can impact your credit score. As we have discussed above, student credit history is generally very limited. Your credit score is made up of many factors, but it does take into account the length of time that you have had your accounts (like bank accounts, loans or credit cards). That’s why it’s important to choose the financial products that you use carefully. Sometimes closing accounts can have a negative impact on your credit score, especially if you do so often. You also want to choose financial products that you can keep for a long period of time because it can be a sign of stability. Now that doesn’t mean you have to keep a credit card that starts charging you high fees, it just means you should be careful about the choices you make.

Using credit responsibly is the best way to improve your credit score over time. Pay your bills on time and don’t overuse your credit lines. If you charge your credit cards up to the max, it can be seen as risky, and your score may drop. Late payments, judgments and bankruptcy all have a very negative effect on your credit, sometimes for very long periods of time.