Home > Credit 101 > How to Repair Your Credit When You’re Still in College

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If you’re in college, you’re probably already worrying about getting good grades, covering your living expenses, and repaying student loans when you graduate. So, worrying about your credit score might not be your biggest concern. But it should be.

The majority of those under 30 (67%) have a credit score under 680, and 38% have one under 621, according to research by ValuePenguin, but a credit score of 700 and up is considered good.

If you’re one those students who fall into the majority of having poor or no credit, here’s how you can start repairing it while still in school.

1. Know your credit score

The first step to fixing your credit score is knowing what it is. Luckily, there are ways you can quickly do this for free.

Check with your credit card provider. More than 5o million people have access to their FICO scores on their monthly credit card statements, according to the Consumer Finanical Protection Bureau.

You can also use AnnualCreditReport.com for free. This service allows you to see your full credit report and, as well as the information from all three credit reporting agencies: Experian, TransUnion, and Equifax. This is great for a yearly thorough check-up, while the other services help you stay on top of your credit score more frequently.

2. Review your credit report for errors

Now that you know your credit score, check your credit report for any errors.

“Credit report errors are common, and they happen to people with good and bad credit,” said Todd Huettner, president of residential real estate mortgage lender Huettner Capital who leads credit score repair workshops.“ In fact, errors lower a good score more than a bad score.

According to Huettner, a single inaccurate collection, lien, or late payment can lower your score over 100 points. For students, credit report errors can lower their score even more because they usually have less credit history and fewer accounts to support their good credit track record.

Inaccurate credit reports can easily damage your ability to buy a home, rent an apartment, lease or buy a car, obtain credit, get a job, or even open up a bank account. So, it’s important to get a full report to review. You can get a free credit report once a year by law from the three major credit reporting agencies or AnnualCreditReport.com.

When you have your report — which can be as quick as minutes if you choose the online option — it is important to study it closely for errors. Ask yourself the following:

  • Is everything listed on your report related to your credit and not someone else’s?
  • Are there any negative comments that are in error?
  • Are all the paid in full and satisfactorily closed accounts reported as such?
  • Is any of the information outdated or incomplete?

“Most negative account information can stay on your credit report for seven years, some as long as 10 years,” said Steven Millstein, who runs the credit repair blog, Credit Zeal. “It is important for you to know how long each piece of information can legally stay on the report and when it must be dropped so that you can follow up on anything that should drop but hasn’t. Any erroneous information can and should be disputed.”

3. Don’t take out student loans for anything other than school expenses

When taking out student loans, it might be tempting to use some of that cash to pay for a night out or some new clothes. But remember, you have to pay every cent of that back with interest.

Student loans are great if you cannot find another way to finance your college education,” said Alayna Pehrson, manager of the credit repair blog for Best Company. “But taking out more than you need is a big mistake.”

You should make sure to cover college expenses with grants, scholarships, and savings as much as possible. The less you have to take out the less you owe. Having an overwhelming amount of student loans will not only require a large portion money to pay back but can also be difficult to keep track of.

Not paying back your student loans or making late payments can be disastrous to your credit. To start the credit repair process, don’t take out more student loans than you need for school.

4. Don’t rack up credit card debt

Like using student loans to pay for non-school related expenses, putting more than you can afford on your credit card will lead to debt and harm your credit score.

Undergraduate students carry an average credit card debt of $3,173, and 20% of 18- to 24-year-olds have “debt hardships,” according to Statistic Brain. This could be one of the reasons the average credit score for this age group is so low.

Since interest rates on credit cards are typically higher than other types of debt — such as a loan — you could get yourself into a dangerous cycle if you’re not able to pay the balance in full. If you don’t have a steady income stream, something typical for college students, finding the money to pay off the balance will be tough. This will both drive up your debt and lower your credit score.

Bottom line: Don’t put more on a credit card than you could afford in cash.

5. But don’t be afraid to use a credit card to build credit

While it’s never a good idea to rack up debt on a credit card because it could lead to a lower credit score, using a credit card responsibly could help you build good credit.

“Timely and responsible use of a credit card will help repair credit,” said Huettner. “Simply waiting around for bad credit to fall off your report will help your score a little, but it does not prove you can manage your finances. So you need new activity improve your score faster.”

To do this, Huettner suggests going the route of a secured card. With these credit cards, you are required to make a cash deposit that’s at least the equivalent of the credit limit before you can make any purchases. This ensures you have the proper amount of money to buy something and won’t have a problem paying off the balance.

In time, the credit limits will rise, and you may no longer have to provide a cash deposit. This will help improve your credit score.

6. Pay your bills on time

It might seem obvious, but paying your bills on time is one of the easiest ways to repair a credit score. According to Huettner, a single 30-day late payment each year will lower your credit score — and more than two will hurt it. This might be shocking to some people who think a few late payments a year is no big deal.

“Discuss any missed or late payments with creditors and ask them if they would be willing to remove any negative remarks so long as you continue to pay on time,” said Millstein. “Your creditors are people, and if you are honest and brief in your summation, they may be willing to oblige.”

7. Start paying down your debt

The quickest and most effective way for a student to improve their credit score is to make payments on your debt.

“Your debt to credit ratio is 30% of your credit score, next in importance only to credit history,” said Millstein. “So, reducing the amount of total debt accumulated versus how much available credit you have is the most efficient and effective way to improve your credit score.”

If you aren’t able to pay the balances down, the next best thing is to divide and conquer, according to Millstein. Divide the balances more equally among your credit sources if possible so that no one thing is maxed out, but they are all as low as possible.

“The best standard is to use no more than 50% of your available credit at any given moment,” he said. “This shows prospective lenders, employers, landlords, and others that you can have credit without incurring outrageous debt and that makes you seem a very good risk.”

Also, consider getting a part-time job or side hustle to pay down debt even faster. Make it a point to put all of the money from those gigs toward paying off loans, credit card balances, and more.

If you’re still feeling totally overwhelmed, you might even want to look into debt consolidation companies. The companies combine multiple debts into one, which can help you get a lower interest rate and manage your payments. This should only be a last resort if you can’t debt consolidation loan or a balance transfer credit card.

Using any one of these tips will help repair your credit score while you’re still in school. Combine a couple or more, and you’ll be ahead of the game once you graduate.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

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