Sensible Ways for to Build Student Credit

Credit is now a necessary part of life; many would call it a necessary evil. But no matter how one views credit, there is no question that in order to get anywhere in life, one must have a credit history. Try walking into a car dealership with cash for the car. A special transaction involving the manager is necessary for you to pay cash. Getting a car financed is easier than plunking down the cash.



It is a sad commentary on where society is today, but the truth is that in some cases it is actually better to have poor credit than to have no credit at all. So how can the young person start gaining entries in his or her credit history without drowning in debt? There are a few sensible suggestions that can help build student credit and assure her or his future.


Let the student put utilities in his or her name. Paying one's obligations in full and on time is a great way to build good credit. Many parents have students' utility bills sent directly to them while the students are at college. This deprives young people of learning to budget, and of getting a foot in the door when it comes to credit. Let your student have the electric and phone bills placed in her or his name. This will show creditors a history of responsibility, and it will teach the student that in ‘the real world' nearly everything costs money. All this without incurring debt.


Co-sign on a loan in the student's name. No student is going to get a loan of any kind (except the credit card kind) without some sort of credit history. This is why a co-signer is needed. Parents should be extremely cautious about this tack. Is your son or daughter responsible? Will she or he pay back the loan? Or will you be stuck with it? If your student is likely to be accountable for the loan, co-signing on a small loan of between $3,000 and $8,000 can help build student credit. As long as the student makes all payments on time, his or her credit score will go up.