What’s the deal with credit for college grads? What makes a good credit score? How can you kick your post-grad credit profile into high gear? If you’re new on the financial scene, you probably have a ton of credit-related questions—and we don’t blame you.

After you graduate, you’ll probably have a job, a grown-up apartment of your own and bills to pay. You’ll also need to deal with financial things—loans, credit cards and savings accounts—by yourself. For better or worse, the money-related decisions you make will impact your credit score, so it’s important to plan ahead.

We’ll begin with a lowdown on what a good student-level credit score is, and then we’ll talk about how to boost your credit score after graduation. Finally, we’ll share a few credit card-finding tips to help you find fantastic plastic.

What’s a Good Credit Score for College Graduates?

Credit scores typically range from about 300 to 850. The average credit score in America in 2020 was 711—up eight points from 2019. Anything over 670 is considered pretty good. With a good credit score in your back pocket, you’ll land better loan, insurance and credit card deals.

If you haven’t had a credit card or a loan before, you might have what’s called a “thin file.” Frustratingly—and somewhat ironically—people with thin credit files find it hard to get credit. It’s a catch 22 situation—how can you build a credit profile if you can’t get credit in the first place?

Thankfully, there are solutions to this conundrum, which we’ll explore in more detail later on. First, let’s explore what a credit report looks like.

What Is a Credit Report?

Your credit report is a little different than your credit score. For one thing, it’s not a number—instead, it’s a full-on rundown of all your credit accounts. Your credit report lists your full name, your address, your employment history, your accounts, your account ages, account types, late payments and high balances—and more. 

There are three major credit bureaus in America—Equifax, Experian and TransUnion. Each of them have slightly different information on file. Some of your lenders might report to Equifax and Experian, but not TransUnion. Others might report only to TransUnion. 

What Goes Into a Credit Score?

Each lender uses a slightly different model to calculate a credit score for you. All three of them are based on the VantageScore or FICO score model, which looks like this:

• Payment history—35%. Make credit card and loan payments on time every month. 
• Amounts owed—30%. Keep your total credit utilization—the amount you borrow—under 30% of your total available credit.
• Length of credit history—15%. Don’t close old accounts. Instead, keep them open to maximize your credit age.
• New credit—10%. Lots of new credit applications in a short time can cause your score to dip temporarily.
• Credit mix—10%. Lenders like to see a good mix of installment and revolving credit types.

Lenders, employers and landlords frequently check credit scores and credit reports, so check your report frequently to make sure everything is correct. To see a free snapshot, request a Credit Report Card at Credit.com.

Why Is Your Credit Score and Credit History Important?

Your credit score and credit history can propel you forward or hold you back. The good news is that the decisions you make now can help your score go up or go down. As a young student or college grad with a fresh credit profile, you’re in a great position to begin building a positive financial history. 

Your credit score influences the interest rate you’ll pay on a host of financial products, including car loans, credit cards and mortgages. As we mentioned above, landlords and employers sometimes also make hiring decisions based on credit scores.

Here are a few more things that hinge on credit score:

• Low-interest consolidation loans
• Affordable, high-quality car insurance 
• Gas, electricity and other utility services
• Cell phone service
• A decent rental property

How Can You Build Your Credit After Graduation?

Credit doesn’t have to be a drag. If you follow these rules, you’ll boost your score and build a stellar credit history.

Get a Copy of Your Credit Report

Before you begin, get a copy of your credit report to see what’s on it. Don’t settle for just one report—get all three of your reports and compare the information on each. If anything looks odd—an unfamiliar account, for instance—challenge it right away.

If you don’t want to approach each bureau separately, sign up with ExtraCredit from Credit.com. You’ll gain access to all three of your credit reports—plus a whole lot more—right away.

Learn How FICO Scores Work

Five main factors go into a FICO score or a VantageScore. To recap, your credit history determines 35% of your score, while the amounts you owe add up to 30% of your score. The length of your credit history, hard enquiries and credit mix contribute 15%, 10% and 10% respectively. Vantagescore percentages are a little different, but the main criterions are the same.

Keep that breakdown in mind whenever you feel tempted to apply for more credit, or to spend more than you should. And remember—don’t borrow more than 30% of your available credit.

Pay Your Bills on Time

Strictly speaking, this one’s part of the five-part FICO score shuffle—but it’s so important that we’re going to give it its own section. Pay your bills on time, every month, without fail. If you miss a month—or if you’re late—your credit score will take a hit. Miss multiple months and your score will drop substantially, and it’ll take a while to recover. 

Pay Your Student Loan Debt

If you have student loan debt, make sure you make payments on schedule. If you’re having trouble paying your debt, speak to your lenders and ask for a forbearance. Whatever you do, don’t just stop paying your student loans. If you do, they’ll end up in a delinquent status, which will really hurt your ability to get credit. 

If the worst comes to the worst and your student loans end up in default, don’t panic. Several recovery options exist, any one of which can help you get back on track. Just call your lenders and tell them about your current circumstances.

Get a Credit Card

Getting a credit card can help you build a credit history. If you have a thin credit history, you might have to start with a credit builder credit card. These “starter cards” generally have low credit limits and higher-than-average interest rates, but they can help you develop your credit profile and gain access to better financial products. 

To get the most out of your credit builder credit card, don’t spend more than 30% of your available credit limit and alwayspay all, or most of your balance back on a monthly basis. After a few payment cycles-probably at least 6-, you should see your credit score improve. At that point, you’ll probably be eligible for a better card.

Open a Savings Account

Opening a savings account won’t directly impact your credit score, but it will leave you with a cushion you can use to pay bills if you find yourself between jobs. It can be hard to create a robust savings plan if your income is tight, but it’s still worth putting a portion of each paycheck into an emergency account.

If your income varies—if you’re self employed, for example—commit to saving between 5% and 10% of each check you get. You’ll be surprised how soon it adds up, and you’ll feel extra responsible.

Use ExtraCredit Build It

We mentioned ExtraCredit from Credit.com earlier. ExtraCredit can help you build, monitor, restore and protect your credit profile. You’ll also get personalized credit offers with rewards. 

If you have a thin credit file, you might benefit most from ExtraCredit Build It, which turns utility and rent payments into brand new tradelines. Whenever you make on-time payments, they show up on your credit reports.

COVID-19 and Student Loans

The COVID-19 crisis hit consumers hard—especially recent graduates, some of whom found it near-impossible to get a job after leaving college. In March 2020, the office of Federal Student Aid established temporary relief for student loan borrowers. From that date onward, interest rates on loans owned by the U.S. Department of Education fell to 0%. Repayments stopped, and so did collection attempts.

A series of government bills extended the temporary relief several times. Student loan payment relief measures are currently scheduled to end in September 2021. We’ll update this section to reflect any changes as they arise.

Credit Card 101 Recap

A good credit score can help you get credit cards, auto loans, affordable insurance policies and—in the future—a low-interest mortgage loan. With the right habits in place, you’ll reap the benefits of a well-rounded credit profile. 

Make sure you always pay your bills on time, don’t spend more than 30% of your available credit and create a financial cushion with a savings account. One more thing—stay on top of your credit reports by signing up for ExtraCredit.