Venisha Colón/THE RIDER
An assistant professor of practice in finance said it is important to have a good credit score because it will help when making big purchases and offered tips on how to build a credit score.
“So, anytime you apply for a loan, you know, whether you’re buying a car, in the future, buying a house, maybe even your student loans, even renting some places, they ask for a copy of your credit score,” Jorge Vidal said. “So, if you want to live in a nice place, you need to have a good credit score.”
Vidal gave some advice on ways to start building credit as a college student. These are some steps students must consider when initiating theirs:
“By paying your bills on time, you start building your credit score,” he said. “It’s really, really, important to pay on time.”
Vidal said secured credit cards are the best option when starting to build credit.
For someone who does not have a credit score but owns a debit card, applying for a secured credit card, which requires an initial cash deposit as collateral, offers a practical way to build or rebuild credit.
“Get a secured credit card and that means that it’s not exactly a credit card like the traditional ones, but you go to the bank and you open a secured credit card,” Vidal said. “And that means you make a deposit, and you can only spend as much money as you deposit in that account.”
Before applying for a credit card
When initiating the process of applying for a credit card, the first thing students must do is check their credit score for free at annualcreditreport.com.
“Get a free copy of your credit score, see what it is,” Vidal said. “You may not have one, and then make sure that you have a good credit score and not having one it’s also OK because you’re just starting.”
After applying for a credit card
After seeing their credit score, the next step for students is to go to their preferred bank and ask if they qualify for a student credit card.
“I will go to one of the major banks like Wells Fargo, Chase and ask for a student credit card,” Vidal said. “And, typically, they’re not going to have any fees, so take advantage of that.”
He also advised that when selecting a credit card, pay close attention to those that do not have any annual fees because they have a low interest rate.
Student Loans
For students with loans who are thinking of applying for a credit card, it is best to make those payments on time to avoid bad credit.
“Make sure that you pay those on time and that’s going to build your score,” Vidal said.
He said to consider a loan only when it is a necessity, such as paying for school.
“I will not take a loan to buy a brand-new car just because I want a brand-new car,” Vidal said. “It’s only for absolute necessities, not for wants.”
Using a credit card
Avoid applying for many credit cards because having too many can also affect a credit score.
“If you have a credit card, pay it off at the end of the month,” Vidal said. “Don’t have too many. Avoid the temptation of applying for credit cards everywhere, even if they give you a discount.”
The Rider asked students what questions they might have about credit cards.
Jose Leija Jr., a mechanical engineering sophomore, asked, “How can I raise my credit score?”
Vidal replied: “If you have multiple credit cards, close them and just keep one. Avoid applying for credit and checking your credit all the time.”
Anselmo Rodriguez, an electrical engineering freshman, asked, “What is the minimum I should be making to take out a credit card?”
Vidal replied: “It’s a more complex number that includes how long have you been with the same employer? How long have you been working? Do you pay your bills on time? Do you have a bank account or a checking account or savings account? So, they take all of that into account.”
Anthony Saenz, a mechanical engineering freshman, asked, “How does interest rate work?”
“The interest rate is the amount charged on top of the principal by a lender to a borrower,” according to Investopedia.com.
“So, let’s say it is 22% and you spent $1,000 and you pay it all off after the month,” Vidal said. “You don’t owe any interest. It’s when you carry a balance that you have to pay the interest on the balance.”
Some students offered advice on credit cards.
“You can start building your credit as early as 18 years old, so start early and on time,” said Claudio Goyosso, an accounting and finance senior.
“As an international student, try to have your [Social Security number] as soon as possible because without that, you may face some issues having a credit card,” said Atena Tavangarifarf, who is pursuing a doctorate in business administration.
