Top 7 Smart Ways for College Students to Build Credit and Avoid Bankruptcy


Student Credit and Loans A recent story by USA Today found the Credit CARD Act of 2009 is cutting down on card companies cashing in on college students. Cards issued through universities and alumni associations dropped by 17 percent in 2010. This benefits student spendaholics, but a lack of credit history is an obstacle for upcoming grads ready to finance a new car or upgrade their furniture. Here are a few smart ways for students to start building credit history.

Credit Cards

We're not suggesting students go out and open a bunch of credit cards, but some plastic used responsibly can go a long way towards creating good credit. There are several options for students to help avoid high interest rates and annual fees.

A secured credit card is one of the easiest for the credit-less to acquire and requires a deposit equal to the credit limit. Rates and fees vary, so comparison shopping is a must. Another option is to become an authorized user on a parents' account. Students don't have responsibility for the bill, but still get the benefits of on-time payments on their credit report.

PT Money put together a list of the best credit cards for students, making comparison shopping much easier.

Store Credit Cards

A merchant credit card is best used for the bare necessities of gas, groceries, etc. They help build a steady history of payment and fit easily within the framework of a budget. Most carry high interest rates so, ideally, you should pay off the balance each month.

Open a Bank Account

This is a given. It's time to put the cash-only allowance policy to an end. While bank account information doesn't appear on credit reports, lenders commonly request it to verify steady income. For those new to managing their own finances, is a useful resource for tracking accounts and expenses.


Parents or other close relatives are usually the best co-signer options. Having someone with established credit history co-sign a loan or credit card application leads to lower rates and a greater chance of approval while building credit for both parties.

Student Loans

Student loans aren't ideal, but with the cost of tuition, sometimes they're unavoidable. Typically they have low interest rates and don't require repayment until after graduation, making them a good credit enhancer. The catch is no credit until payments come due.

Employment History

Jumping from job to job is pretty common in college, but sticking with one employer is ideal. Employment history appears on credit reports and lenders prefer to see someone who has stable employment with a steady increase in salary.

Pay Your Bills!

Paying card bills on time is the true key to good credit. If there's a payment coming up and things are tight, don't skip it. Cancel the cable, sell your gift card from Aunt Esther or pawn unused video games and movies. A few missed monthly payments can have a serious impact on a credit score for many years.

I'm a former 7th grade Science teacher turned stay-at-home mom that lives in Houston, Texas. I am married to my college sweetheart and have a beautiful daughter named Riley, who definitely keeps me on my toes! I am also involved in starting a small business which would both manufacture and sell an invention that I've patented, called Toothpaste 2 Go. I love interacting with my readers and hope to learn as much about you as you learn about me!

Melissa @ Mommy Living the Life of Riley!
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2 Responses to Top 7 Smart Ways for College Students to Build Credit and Avoid Bankruptcy!

    Jessica, The Debt Princess Says:


    I absolutely needed this in 1993 when I received my first credit card as a sophomore in college. I think I got a t-shirt for signing up. It only got worse from there. I ended up filing for bankruptcy 2 years after I graduated. It was the start with a long time love affair with credit cards. One I completely and totally regret, nearly twenty years later.

      Melissa Says:


      Thanks so much for your comment, Jessica! You’re so right, for the free t-shirt in college suckered me in too and that credit card bill ended up costing me a ton of money for the next 15 years as I struggled to pay it off. Credit cards definitely allowed me to live beyond my means and I was just too immature in college to see the big picture and what all of those items were going to really cost me in the long run! Thanks again for stopping by…have a wonderful weekend!

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