Thus far, we have assumed that you want to build your credit as a college student. But why? What good does it do you to have a good credit score by the time you have graduated? The truth is, there are various reasons to begin building your credit as soon as possible. This is because it takes years to build (and rebuild) your credit.
Let’s use a comparison to show the importance of building credit as a student. Student A gets a credit card for students during their freshman year of college. They only use it occasionally and always pay down their balance. After four years of good habits, they can leave college with a good credit score. Consequently, if they want to get a mortgage to buy a home, an auto loan, or even a better credit card, they will have a much better chance of getting good rates and terms.
Student B didn’t see the need to get a credit card as a student, so they waited until after graduating from a four-year college to get one. They have just started building their credit, giving them virtually no credibility with lenders. Unless they can get a parent to cosign a loan, they will likely not qualify for a mortgage, and if they do, the terms will not be in their favor.
In this situation, student A spent 4 years building their credit and preparing themselves for adulthood, while student B waited too long to start building their credit.