Tips for Building a Credit Score
Paying off your entire balance every month shows that you simply are using your credit properly, that you simply are budgeting, and that your expenses don’t exceed your income. Young consumers still run into trouble at this stage of life, said Thuy Lam, certified financial planner at Objective Financial Partners.
“I see so many students — even after I was a student, my very own friends — that they find yourself racking up $20,000, $30,000, $40,000 in bank card debt while they’re in class because they do not realize that, ‘Oh, it isn’t free money’. ” she said.
Set a low limit and resist any offers to extend it until you develop good spending habits, Lam added. For students with minimal money flow (no part-time work while in class, little savings), there’s no use to make use of this bank card.
You can add a recurring bill to your card, resembling a phone plan. It’s easy to pay a small amount in full, and showing it every month ensures history of on-time payments.
“I think the key is to remember: What is the purpose of a credit card?,” Lam said. “And for college students, that’s No. 1: facilitating small bill payments and No. 2: constructing and establishing credit.
“The purpose of a credit card is not so that we can freely spend money, but so that we live in a credit system,” she added. “It’s just important to build credit and keep it healthy.”
Are rewards bank cards good for college students?
As for rewards, Taub identified that some students may receive support from their parents, savings, RESPs or scholarships — and with those resources may find value in trips, live shows or other lifestyle perks.
However, she also noted that almost all students have financial problems; A recent TD survey found that 65% of scholars reported being financially unstable. A straightforward cashback card could also be more useful.
