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5 Tips For Recent College Grads Building Their Credit

The closer you get to graduation, the more excited yet nervous you are. Could it be because you’re going to miss your peers? Or, could it be you’re afraid of entering the “real world”? No matter your reason, you’ll have to accept the world of “adulting.” So, what are one of the biggest concerns about adulting? Credit. Or at least, building it. Although it sounds scary to think of having no credit before entering post-undergraduate life, you are not alone. According to a survey conducted by Bankrate, approximately 63% of millennials do not own a credit card. However, that number can be changed by using these tips that will help you build and maintain your credit:

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1. 1. Apply for store credit cards like the Target, Forever 21, or Amazon store cards.

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Store credit cards are the easiest and fastest way to get into the world of credit. My first credit card was an Amazon store credit card. I was approved the first time I applied and was given a limit of $700. I used this card to my advantage and purchased a hair dryer priced around $250 so I can start paying it back every month. Eventually, the credit bureau was notified of my account opening, and my score began to increase as I was faithfully repaying my card. Store credit cards have high approval rates because they usually don’t have high credit limits when you first open them- nothing for them to worry about!

2. 2. Check your credit score for free and at no harm at

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People are usually apprehensive about checking their credit scores because they fear their credit score will drop. This is also known as a soft inquiry, which can affect your credit score. However, Credit Karma allows you to check your score as many times as you want without hurting your credit. I check mine every week when it updates just so I can stay on track with all my borrowings. The “credit factor” section is the most useful as it outlines my credit limits, balances, and payment history. The site also has great tools like the “debt repayment calculator” which shows you how long it will take to pay off your debt by inputting the numbers that apply to you.

3. 3. Keep your overall credit card balances under 30 percent.

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The relationship between your credit limit and your credit usage can play a big role in your credit score. For instance, if your credit limit is $1,000 and your balance is $700, you’re using 70% of your limit, which is more than half and can lower your score. It’s just like life- when you have too much of one thing, you leave no room for others. I usually focus on paying off the credit cards with the highest balance first so I can keep my overall balance below the 30% mark. Keep in mind that if you’re also using a high percentage of your credit limit, you are at risk of “maxing out” your card which is also detrimental to your score.

4. 4. Apply for cards like the Barclaycard which offer great promotions.

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When looking to purchase my MacBook Air in November 2015, I did my research and found the BarclayCard which offers special financing on Apple purchases. My laptop cost around $1,300 and with the promotional offer, I was given 18 months to pay it off with no interest. However, if I don’t have the card paid off by June 2017, I will be charged all the accumulated interest from the first month of purchase. I also recommend PayPal Credit- the good and bad thing about this online credit card is that it doesn’t report to your credit bureau, so consider yourself lucky if you’re not the most consistent with repayment. Yet, if you’re loyal to your payments, you would want this to reflect on your credit score. PayPal Credit is easy to apply to and they almost approve anyone. They also have special financing offers like six months of no monthly payment or interest if you make a purchase of $99 and more. Larger purchases offer an extended amount of time, like 12 or 18 months.

5. 5. Don’t think of your credit card as cash.

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One of the main things people who don’t have a credit card tell me is they don’t want one because they have crazy spending habits which they will be repaying in the future. Don’t think of it that way- use your credit cards for more important and worthy things like a laptop, a flight, a vacation, and food. I strongly recommend using a credit card to buy a flight because they can sometimes be expensive and it can be difficult to save a few hundreds with everything that might be going on in your life. In other words, use your credit card when you’re low on cash or when you know you’re going to consistently pay it back. Sometimes I forget my debit card at home and use my credit card at a store. However, I repay my credit card by using my phone app and transferring the money from my checking account. When I say “I’m broke,” I actually mean my debit card/cash funds are low but I refuse to use my credit card if it’s not worth it. Just think about how chained down to debt you will be if you fall into every shopping temptation.

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