How to Build Credit as a New College Grad

by Maurie Backman | Published on Aug. 28, 2021

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College graduates receiving diplomas

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Welcome to adulthood. Here's how to build some credit for the first time.

The more established a credit history you have, the more borrowing options you'll give yourself. And as a new college graduate, building credit is definitely worth focusing on. Here are a few tips to get started.

1. Start using a credit card right away

Credit cards are one of the most useful tools for building credit, so it pays open one as soon as you can and charge at least a couple of expenses on it that you pay off month after month. That said, getting your own credit card can be tricky if you don't have much of a credit history, which may be the case if you've recently wrapped up college and haven't been responsible for your own bills yet.

If you can't qualify for a regular credit card just yet, you can look at opening a secured credit card. A secured credit card doesn't give you a whole lot of buying power because what you're really doing is putting down a deposit with your own money that serves as your credit limit and charging against it. But secured credit cards can help you build credit, so it's worth going this route if you can't manage to get a regular credit card.

Another option is to see if you can get added as an authorized user on an established credit card account. Your parents may be willing to add you to one of their accounts, as might an older sibling or another family member who trusts you. Even if you don't make purchases using that card, any positive credit activity stemming from it, like timely bill payments, will count toward your own credit record.

2. Pay all bills on time

The single most important factor that goes into establishing a credit score is your payment history. If you want to build credit, be timely with all of your bills. In fact, it could make sense to automate some or all of your payments so that you don't end up being late due to sheer forgetfulness.

3. Make sure your rent payments are reported

As a new college graduate, you'll need a place to live, but you probably won't be in a position to buy a home right away. Rather, you're likely to rent instead.

While timely mortgage payments count toward building a credit history, rent payments aren't always reported to the credit bureaus that compile data on you to establish a credit history. But rent can be reported, so work with your landlord to sign up for a service like RentTrack that allows that positive activity to become a part of your record.

The sooner you're able to build credit, the more financial flexibility you'll buy yourself. If you're new to the working world, you should expect the process of building credit to take some time. But if you follow these tips, you'll put yourself in a stronger position to establish a credit history and make it easier to borrow money in the future.

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