As a college student, you’ve been working hard at school so you can get a degree and enter the workforce. With this next phase in your life, you likely will start being financially responsible for yourself, if you’re not already. One of the key aspects to becoming financially responsible is understanding credit and how to handle your money responsibly.

What is Credit and Why Should You Build It?
To put it simply, credit is a way for you to borrow money for what you need now, with the promise that you’ll pay for it later.  A credit score is essentially your overall reputation for how well you pay back what you’ve borrowed. For example, if you pay your credit card each month when the statement’s balance is due, your credit score will be positively reflected; however, if you miss payments often, your score will be negatively impacted.

There are a lot of factors that can affect your credit score, including, but not limited to how much credit you have, what percentage of that credit you use, and how long you’ve had a credit history.

Your credit score, regardless of what it is, can have an effect on other aspects of your life. In some cases, if you have a low credit score, you can be rejected from certain apartments, loans, jobs, and may pay more on your bills. In contrast, having a good credit score can allow you to get access to better rates, automatic approval for credit cards with perks, and higher credit card limits/purchasing power.

As a student, one of the best ways you can start building credit is by getting a credit card specifically made for students. Sikorsky Credit Union offers a Student VISA® specifically for those busy students that want to start taking control of their finances. With no annual fee and the opportunity to earn rewards points on daily purchases, this is a great step to start building credit. For more information, please click here.

How to Handle A Credit Card
Being able to build your credit via credit card is a great way to start being more financially responsible. However, it’s incredibly important to be able to keep up with your credit card payments. You don’t want to start damaging the score you’ve just started to accumulate!

The best way to handle your credit card is to only spend what you know you can afford to pay off. Start off by using the card only for small purchases, such as your Spotify Premium subscription or gas money, until you get used to having to pay it off every month.  As you start to earn more money, you can begin to charge more, but keep in mind this lesson.

Keeping Your Credit Score High
If you’ve been mindful of paying your credit card each month, you’re already off to a good start. But your credit score can be easily affected by other financial decisions you may make. For example, did you know that if you co-sign for your friend’s loan or credit card and they miss a payment, that affects your credit score too?  As only you can truly be in control and responsible for your own finances, it’s best not to co-sign for anybody unless you’re 100% sure they’re on top of their payments as well.

Additionally, while you may be tempted to sign up for many credit cards all at once, this can also negatively impact your credit score. Each time an inquiry is pulled on your credit score, it can lower your score. If this happens many times within a short time period, it doesn’t reflect well on you or your score, even if you’ve been responsible with credit thus far.

The Bottom Line
Building credit is important as it affects many areas in your life. It’s not enough to simply have a credit card, you need to protect your credit score by being responsible with paying your bill on time each month.
If you’re looking for your first credit card, consider Sikorsky Credit Union’s Student VISA®, where you can earn rewards and have no annual fee.

Photo by Priscilla Du Preez on Unsplash