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I’m graduating with one thing most college students don't have yet — a good credit score

September 20 2022
7 min read
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In May 2023, I will walk across the stage with three things: a cap, a gown and something that I wish more college students had — a good credit score.

College students have an average credit score of 630, according to Credit Karma. That is considered to fall in the “fair” range, making college students less likely to be approved for things such as a mortgage, car loan or credit line. If they are approved, they will most likely pay higher interest rates.

At first, I did not understand the value of good credit or why my mother had added me as an authorized user to her retail credit card as a high schooler. At the time, she told me, "You'll thank me for this later, Makailah."

When it came time to apply for my first apartment, I was told that I needed a co-signer. Following a check on my credit score, however, I was told that my credit history was sufficient and my mom could be removed as a co-signer. At that moment, the power of good credit was revealed to me.

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For three and a half years, I have been building my credit and digging deep into how to maintain it. Here’s what I learned and why I am now thanking my mother for the head start.

Make a habit of paying bills on time

As a student I work one to two hourly wage jobs at a time at some points, but autopay is not something that I can confidently enroll in due to not having consistent income. After noticing an increasing amount of financial obligations this past June, I knew I had to do something to help me stay organized.

In June 2022, I created a spreadsheet that listed all of my financial obligations with a due date that is at least five days earlier than the actual due date. Now, at the end of each month, I check my spreadsheet to see how I can stretch my money and budget appropriately for the month ahead. With all of my due dates in one place, it has become substantially easier for me to pay my bills on time.

In this way, I have established a good habit for the real world and future bills to come.

RAWPIXEL.COM/SHUTTERSTOCK

A good payment history is the most important factor in your credit score. With your payment history determining 35% of your overall score, paying your bills on time is essential. Financial hardships happen, and sometimes you may be short on the funds to pay your credit cards. As a good practice, at least make the minimum payment. Most credit card companies extend a 30-day grace period before a late payment is reported to the credit bureaus. If a late payment occurs, you can call and request a onetime late payment forgiveness, which is strictly done on a case-by-case basis. This is where an otherwise good payment history comes into play.

The last thing you want to do is go through the hassle of figuring out how to save your credit score after a late payment.

Keep your credit utilization low

Whenever I charge something to my credit card, I always aim to have a plan for how I will pay it off. Recently, I went to a dinner with my girlfriends. At the end of the meal, we were informed that the bill had to be paid on one card. I took that as an opportunity to use my Wells Fargo Cash Back College Card to pay the tab. I was able to reap 2% cash back on the total bill, and after everyone sent me their portion of the bill, I was able to pay my credit card balance back down, keeping my utilization rate low.

The information for the Wells Fargo Cash Back College Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

In simple terms, a credit utilization rate is the amount of credit that you are using divided by the amount of available credit that you have. For example, if I have a total credit limit of $5,000 and I have a balance of $1,000, my credit utilization rate is 20%. I recommend keeping your credit utilization under 30% for the best possible score. A low credit utilization shows that you are doing a great job at managing your money and credit. It can be a green light to lenders and creditors as you seek to add additional credit lines.

If you happen to overspend one month, it may not hurt to ask for a credit limit increase from your issuer in order to lower your utilization rate. My advice, again, is to pay your credit card balance in full monthly before the due date, as it can potentially increase your credit score and eliminate accruing interest.

Always keep your oldest credit card open

Let's face it, the length of your credit only accounts for 15% of your credit score. Contrary to what we credit card newbies may want to believe, this does not mean that if you opened a credit card less than a year ago and followed all of the above steps, you will have a great credit score and high approval odds. You will most likely need a co-signer.

The length of your credit plays a vital role in your approval odds for financial assets such as your first apartment, first mortgage or even rewards credit card. Those with a longer credit history showing on-time payments are considered less risky to lenders than those with an inconsistent on-time payment history or even a shorter credit history.

CASPER1774 STUDIO/SHUTTERSTOCK

Right now I have under four years of credit cardmembership under my belt. Having at least five years of good credit history will increase your approval odds. Remember, the longer your history is, the higher your score will be.

When choosing your first card, keep in mind that store credit cards are (almost) always a bad idea. That said, as a result of being an authorized user on my mom’s Dillards card, I was able to be approved for my Wells Fargo Cash Back College Card. With both credit cards being in good standing, I would have to think long and hard about closing those cards, as it could reduce the length of my credit history and hurt my score.

Bottom line

As a 21-year-old, I am still learning about credit and finances. Due to my consistent payment history, low credit utilization and length of credit, I have placed myself in a good position. What's more, I feel better about my approval odds for my next card. I'm looking at the Capital One Venture Rewards Credit Card, with the aim to take a dream vacation to Bali using points and miles.

My advice to college students who are ready to open their first college card is to research ways to use their new college card responsibly. Understand that it is easy to get into debt and even harder to get out of debt. Start by establishing an awareness of the basics of credit and your financial goals before opening a credit card to help you manage your adult money after graduation.

Featured photo by Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Rewards Rate

6X6x points at hotels participating in the Marriott Bonvoy® program.
4X4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
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  • Intro Offer
    Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.

    Limited Time Offer: Earn 100,000 points
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  • Annual Fee

    $125
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.

Pros

  • 6x points on eligible purchases at hotels participating in the Marriott Bonvoy program
  • 4x points at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
  • 2x points on all other eligible purchases
  • Earn a free-night award each card renewal month (up to 35,000 points)
  • Receive 15 elite night credits to jump-start status
  • Transfer Marriott points to 40+ airlines

Cons

  • Airline points transfer ratios are poor
  • Must spend $60,000 in a year for second free-night award
  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
  • 2x points on all other eligible purchases.
  • Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
  • Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
  • Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
  • Terms apply.
  • See Rates & Fees