How New Grads Can Get Good Credit After College
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As the end of the school year approaches, many seniors begin to focus on life after college.
While a new grad’s credit score might not be a priority right now, it’s arguably one of the most important things to think about as soon as they graduate, if not more. early.
A good credit score is the key to achieving many of the milestones you will encounter after college. Having a healthy credit profile makes it easier to rent an apartment, save money on car insurance, qualify for the best credit cards, and the best rates if / when you refinance your student loans. It can even help you look good to potential employers who might perform a credit check.
The first step to having good credit is to establish credit. The length of your credit history is 15% of your credit score, so the sooner you start building credit, the better.
Below, Select explains how to get a good credit score after college.
Check your credit score
Before you can get good credit, you must first check your credit score to see where you are now.
A credit score is a three digit number that is a snapshot of your credit profile. Essentially, it tells lenders about your potential credit risk and your ability to repay the money you borrow. Scores typically range from 300 on the low end to 850 on the high end.
There are many ways to check your score for free (and it won’t hurt your score to check it regularly). Here are three free credit score resources available to everyone:
- Capital One’s CreditWise®: Free VantageScore from TransUnion
- Chase Credit Journey: Free VantageScore from TransUnion
- Discover Credit Scorecard: Experian’s Free FICO Score
These resources can also provide insight into the main factors affecting your credit score, simulators on the impact of certain actions (such as paying down debt) on your credit, and helpful tips for improving your credit score.
Start paying off your student loans on time
If you are graduating with student loans, you might be surprised to learn that you have already started to accumulate credit.
Student loans are a form of installment credit, which means they show up on your credit report. Examples of other installment loans are auto loans and mortgages. Unlike revolving credit (think credit cards), installment credit occurs when a borrower is assigned a finite amount of money to repay in a fixed number of monthly installments over a specified amount of time.
Paying your monthly credit bills like student loans on time will help improve your credit score. Your payment history (whether you paid on time or late) is the most important factor that determines your credit score, accounting for over a third (35%) of your credit score calculation. For this reason, it’s critical that you make sure you pay off your student loans on time, or at least have a plan in place to start paying them off once you get your first job.
A useful tool for increasing your credit score once you start living on your own
When you move into your first apartment and start paying your bills, there is a tool that can help you instantly boost your credit score.
Experian Boost ™ is a free feature that lets you add your phone to time, internet, cable, utilities (gas, electricity, water) and streaming payments like Netflix®, HBO ™, Hulu ™ and Disney + ™ to your Experian credit report. According to its website, average users receiving a boost reported a 10 point increase in their FICO score.
Visa Petal 2 credit card issued by WebBank, FDIC member.
Capital One® Secured Mastercard®, Capital One® QuicksilverOne® Cash Rewards credit card information was independently collected by Select and has not been reviewed or provided by the issuer prior to posting.
Editorial note: The opinions, analyzes, criticisms or recommendations expressed in this article are those of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.