The Importance of Building Credit for College Students


In today’s fast-paced world, financial literacy is a skill that cannot be overlooked, especially for college students. One crucial aspect of financial literacy is understanding the significance of building and maintaining good credit. In this article, we will delve into why credit matters and why college students should start building credit as soon as possible.

Understanding the Basics of Credit

What Is Credit?

Before we dive into why credit matters, let’s start with the basics. Credit is essentially your financial reputation. It is a measure of your ability to borrow money and pay it back on time. Your credit history is tracked by credit bureaus, and it plays a pivotal role in various aspects of your financial life.

The Components of a Credit Score

Your credit score is a numerical representation of your creditworthiness. It is calculated based on several factors, including:

1. Payment History

This is the most significant factor in your credit score. It tracks whether you make your payments on time.

2. Credit Utilization

This measures the amount of credit you’re using compared to your total available credit.

3. Length of Credit History

The longer your credit history, the better it reflects your ability to manage credit responsibly.

4. Types of Credit

Having a mix of different types of credit, like credit cards and loans, can positively impact your credit score.

The Role of Credit in Financial Transactions

Credit is not just a number; it’s a passport to financial opportunities. Here’s why it matters:

1. Access to Loans

Good credit opens the door to various loans, including student loans, car loans, and mortgages, with lower interest rates.

2. Lower Insurance Premiums

Insurance companies often use credit scores to determine your premiums. A higher credit score can lead to lower insurance costs.

3. Rental Applications

Landlords may check your credit when you apply for a rental property. A good credit history can make it easier to secure a lease.

Why College Students Should Start Building Credit Early

Establishing Financial Responsibility

Starting to build credit while in college teaches financial responsibility. It forces students to budget and manage their finances effectively.

Securing Better Interest Rates

Building credit early means that by the time college students need significant loans, like a car loan or a mortgage, they will qualify for better interest rates, potentially saving thousands of dollars.

Preparing for Life After College

Post-graduation life comes with various financial responsibilities, from renting an apartment to buying a car. Having good credit can make these transitions smoother.

How to Start Building Credit as a College Student

1. Apply for a Student Credit Card

Many credit card companies offer student credit cards with lower credit limits and easier approval requirements. Using a student credit card responsibly can kickstart your credit history.

2. Become an Authorized User

Ask a family member with good credit if you can be added as an authorized user on their credit card. This can help boost your credit score.

3. Pay Bills On Time

Consistently paying bills, such as rent and utilities, on time contributes positively to your credit history.

4. Monitor Your Credit Report

Regularly checking your credit report helps you identify and address any errors or fraudulent activity promptly.

Finnt: Your Partner in Building Credit

In your journey to build credit as a college student, Finnt offers a range of financial products designed to help you succeed. We understand the unique needs of students, and that’s why we provide three different credit card options in addition to the Finnt debit card (which you can use to pay off your credit), specifically tailored to students looking to start building credit.

1. Discover it® Student Cash Back Card

We selected the Discover it® Student Cash Back card because it’s ideal for students new to credit, offering strong cash back rewards, no annual fees, and an impressive cash back matching feature in the first year. It’s a great choice for building credit responsibly.

2. Capital One® SavorOne Student Cash Rewards Card

We chose the Capital One® SavorOne Student Cash Rewards card because it’s ideal for students with lower incomes, promoting healthy financial habits on campus. It offers cash back rewards on dining and entertainment, a $50 sign-up bonus, and no annual fee. With the possibility of a credit limit increase within six months, it’s a great choice for budget-conscious students looking to build credit responsibly.

3. Chase Sapphire Preferred® Card

We chose the Chase Sapphire Preferred® Card for students with higher incomes seeking exceptional travel benefits. This card is perfect for those who travel frequently, offering substantial rewards for travel expenses and valuable perks like trip insurance and no foreign transaction fees.


In conclusion, building credit is not just for adults. College students can benefit greatly from establishing good credit early on. It sets the foundation for financial success, provides access to essential financial opportunities, and prepares students for a financially stable future.

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