Why Is It Important for Students to Establish Credit and Pay Bills On Time While They are In College?

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While building credit for their post-college years is the last thing on busy students’ minds, establishing credit history is extremely important for building a strong financial foundation. Your undergraduate actions influence how easily you’ll be able to transition into the professional world. Here’s why is it important for students to establish credit and pay bills on time while they are in college:

  1. Your ability to apply for jobs, loans, apartments, etc. is determined by your credit history

A credit score is a numerical value that represents how “creditworthy” an individual is. Many property owners run a credit check on apartment applications. A low or non-existent credit history may result in rejection or a substantial cash deposit. In this case, building good credit is necessary in your undergrad years when looking for a place to live on campus. In your post-grad years, bad or non-existent credit can result in rejection from some jobs and loans. You will also need good credit to buy or rent your first car, which you will most likely need to commute to work every day.

  1. Without credit history, everything is more expensive and more difficult

While you might be a trustworthy and reliable person, there’s no way to validate this without credit history. Lack of Credit history can make purchasing the essentials of adulthood more difficult and potentially costlier. Credit history is used to determine insurance rates and loan interest rates, on car loans, personal loans and most importantly your home loan once you enter the working world. Credit history can also determine whether you have to pay additional security deposits or your ability to be accepted for your apartment rental application.

  1. Credit cards teach money management skills

Having a credit card while your young teaches important financial skills that will be available for the remainder of your adult life. Use your credit card for small purchases that you know you can afford and simply pay off your statements each month. Use your credit card like a debit card – never buy anything you won’t be able to cover when your monthly bill arrives.

  1. There will never be an easier time to build credit

When you’re in college, your parents are likely still involved in your financial life. If your parents are willing, they can add you as an authorized user on their credit card. This gives students the opportunity to establish credit history while allowing parents to an oversight into their student’s spending. Another option is to have your parents serve as the cosigner when you apply for your first credit card. 

  1. You can earn perks such as cash back bonuses and travel rewards

Some cards have various reward bonuses. If you use your card consistently, you can earn rewards such as airline miles, cash rewards, and points for hotels. Airline miles and hotel points are beneficial if you plan to travel during school breaks. Other student-focused cards offer perks such as free access to Amazon Prime.

About Author

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LaDonna Dennis

LaDonna Dennis is the founder and creator of Mom Blog Society. She wears many hats. She is a Homemaker*Blogger*Crafter*Reader*Pinner*Friend*Animal Lover* Former writer of Frost Illustrated and, Cancer...SURVIVOR! LaDonna is happily married to the love of her life, the mother of 3 grown children and "Grams" to 3 grandchildren. She adores animals and has four furbabies: Makia ( a German Shepherd, whose mission in life is to be her attached to her hip) and Hachie, (an OCD Alaskan Malamute, and Akia (An Alaskan Malamute) who is just sweet as can be. And Sassy, a four-month-old German Shepherd who has quickly stolen her heart and become the most precious fur baby of all times. Aside from the humans in her life, LaDonna's fur babies are her world.

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