Make sure your student knows the basic cornerstones of credit building, including the factors that are used to determine credit scores. While factors like new credit, length of credit history and credit mix will play a role in their credit later on, the two most important issues for credit newcomers to focus on include payment history and credit utilization.<\/p>\n
Payment history makes up 35%<\/strong> of FICO scores and credit utilization ratio makes up 30%<\/strong> of scores. <\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n Generally speaking, college students and everyone else can score well in these categories by making all bill payments on time and keeping debt levels low. How low? <\/p>\n Most experts recommend keeping credit utilization below 30% at a maximum and below 10% for the best possible results. This means trying to owe less than $300 for every $1,000 in available credit limits at a maximum, but preferably less than $100 for every $1,000 in credit limits.<\/p>\n One step you can personally take to help a child build credit is adding them to your credit card account as an authorized user. This means they will get a credit card in their name and access to your spending limit, but you are legally responsible for any charges they make. Obviously, this move works best when you have excellent credit and a strong history of on-time payments and you plan to continue using credit responsibly .<\/p>\n While this step can be risky if you’re worried your college student will use their card to overspend, you don’t actually have to give them their physical authorized user credit card. <\/p>\n In fact, they can get credit for your on-time payments whether they have access to a card or not. If you do decide to give them their credit card, you can do so with the agreement they can only use it for emergency expenses.<\/p>\n Your child can build credit faster if they apply for a credit card and get approved for one on their own, yet this can be difficult for students who have no credit history. That said, secured credit cards require a refundable cash deposit as collateral are very easy to get approved for.<\/p>\n Some secured credit cards like the Ambition Card<\/a> by College Ave even offer cash back1<\/sup> on every purchase and don\u2019t charge interest2<\/sup>. If your child opts to start building credit with a secured credit card, make sure they understand the best ways to build credit quickly \u2014 keeping credit utilization low and paying bills early or on time each month.<\/p>\n While secured credit cards are a good option for students with little to no credit get started on their journey to good credit, there are also credit cards specifically designed for college students. Student credit cards are unsecured cards, meaning they don’t require an upfront cash deposit as collateral, but charge interest on any purchases not paid in full each month.<\/p>\n Many student credit cards offer rewards for spending with no annual fee required as well, although these cards do tend to come with a high APR. The key to getting the most out of a student credit card is having your dependent use it only for purchases they can afford and paying off the balance in its entirety each billing cycle. After all, sky high interest rates don’t really matter when you never carry a balance from one month to the next.<\/p>\n “One of the safest ways for college student to build their credit by learning valuable money skills.”<\/p>\n<\/div>\nAdd Your Child as an Authorized User<\/h2>\n
<\/a><\/a>Encourage Them to Get a Secured Credit Card<\/h2>\n
![\"screenshot](\"http:\/\/www.petermaneurope.com\/wp-content\/uploads\/2024\/02\/College-Ave-Ambition-Card-1024x549-1.png\")
<\/figure>\n<\/a>Opt for a Student Credit Card Instead<\/h2>\n
Student Credit Cards…<\/h2>\n