Achieving a credit score of over 700 before graduation can open doors to better financial opportunities, like favorable loan rates and easier approval for renting an apartment. By implementing smart credit practices early, you can reach and maintain a high score while still in college. Here’s a step-by-step guide to help you understand and improve your credit score to 700 or higher.
Why a 700+ Credit Score Matters for Students
A credit score over 700 is considered “Good” and demonstrates to lenders that you’re a reliable borrower. This score range can lead to:
- Lower Interest Rates: Get better deals on loans and credit cards.
- Easier Approval: Land apartments or job opportunities where credit checks are required.
- Higher Credit Limits: Qualify for larger lines of credit, making budgeting easier in the future.
Building your credit score now can give you a head start on financial goals after graduation.
Step-by-Step Guide to Building a 700+ Credit Score
1. Open a Student Credit Card and Use It Responsibly
A student credit card is an ideal starting point for building credit. Many cards are designed specifically for students with limited or no credit history, offering low credit limits and helpful perks.
- Make Small Purchases: Only spend what you can pay off by the end of the month.
- Pay on Time, Every Time: Late payments can hurt your score. Set up autopay to ensure timely payments.
Recommended Cards
- Discover it® Student Cash Back – Offers cash back on common spending categories.
- Capital One SavorOne Student Cash Rewards – Rewards dining, streaming, and groceries.
2. Keep Your Credit Utilization Low
Credit utilization is the percentage of your available credit that you’re using. Keeping this ratio low (below 30%) can positively impact your score.
- Aim for Under 10% Utilization: The lower, the better, for optimal score improvement.
- Make Multiple Payments Monthly: Paying off part of your balance multiple times a month can keep utilization low.
3. Become an Authorized User on a Trusted Family Member’s Account
If a family member has a strong credit history, ask to be added as an authorized user on their credit card.
- Ensure Good Habits: Only ask someone with a record of on-time payments and low balances.
- Monitor Your Impact: Being an authorized user can boost your score but can also affect it if the primary account holder misses payments.
4. Pay All Bills on Time
Your payment history is the largest factor in determining your credit score, accounting for 35% of it. Missing payments can significantly lower your score, while consistent on-time payments build your score.
- Set Up Payment Reminders or Autopay: These ensure that you never miss a due date.
- Include All Bills: Pay not just credit cards but also utilities, rent, and other recurring expenses on time.
5. Limit New Credit Applications
Each new credit application results in a hard inquiry, which can temporarily lower your score.
- Space Out Applications: Avoid applying for multiple credit accounts in a short period.
- Use Pre-Approval Checks: Many credit issuers offer pre-approval checks that don’t impact your score.
6. Monitor Your Credit Report
Regularly reviewing your credit report allows you to spot and correct any errors that might be affecting your score. Checking your report also keeps you informed of your credit progress.
- Access Free Reports: Use AnnualCreditReport.com for a free credit report from each major bureau (Experian, TransUnion, and Equifax) once per year.
- Dispute Errors: If you find inaccuracies, contact the credit bureau to correct them promptly.
7. Consider a Secured Credit Card if Needed
If you’re unable to qualify for a standard student credit card, a secured credit card can help you build credit. Secured cards require a deposit as collateral, which becomes your credit limit.
- Choose One That Converts: Some secured cards, like the Discover it® Secured, allow you to transition to an unsecured card after consistent positive use.
- Use the Card Sparingly: Make small, manageable purchases that you can easily pay off.
Additional Tips to Keep Your Credit Score Climbing
Building credit takes time and consistency, but the following practices can help you keep your score on an upward trend.
Keep Balances Low Across All Accounts
If you have multiple credit cards, spread out your spending to keep balances low on each card. This helps maintain a low overall credit utilization rate.
Avoid Closing Old Credit Accounts
The length of your credit history affects your score, so avoid closing older accounts, even if you’re not actively using them.
- Keep Cards Active: Use older cards occasionally for small purchases to keep them open and maintain credit history.
Use a Credit Score Tracking Tool
There are free tools available that let you track your credit score and provide tips for improvement.
- Try Experian Boost: This tool adds eligible utility and phone bills to your credit report, potentially increasing your score.
- Use Credit Karma or Credit Sesame: These tools allow you to view your credit score and receive insights on what actions might impact it.
Conclusion
Building a credit score of over 700 before graduation requires disciplined habits and responsible credit use. By making on-time payments, keeping credit utilization low, and monitoring your credit report, you can establish a strong credit foundation for the future. The sooner you start, the closer you’ll be to reaching that 700+ credit score and unlocking new financial possibilities after graduation.
If you have any queries feel free to comment down below!
FAQs
Why is a 700+ credit score important for students?
A 700+ credit score can help students secure lower interest rates, qualify for higher credit limits, and make it easier to rent apartments or apply for certain jobs that require credit checks.
How long does it take to build a 700 credit score from scratch?
With consistent positive habits, it may take a year or more to build a score of 700. However, individual timelines vary depending on credit activity and history.
Do student loans impact my credit score?
Yes, federal and private student loans both impact your score. Making regular payments on student loans helps build a positive credit history.
Can having too many credit cards lower my credit score?
Having multiple cards doesn’t hurt your score if they’re managed well. However, each application results in a hard inquiry, so space them out and maintain low balances.
Is it bad to pay off my credit card early?
Not at all! Paying off your balance early can help keep your credit utilization low, which positively affects your score.
