Students walking into 1 Pace Plaza in NYC.
Financial Literacy

Building Credit

Building Credit as a College Student

Credit Cards: Are they Good or Bad?

When used properly, credit cards can be a great financial tool. However, if they are abused, their use can have major negative financial consequences that stay with you for some time. Credit cards should not be used as a means to improve or support your current lifestyle. They should be used responsibly to build credit.

Before you consider a credit card, consider the following:

  • Do you need it? If you don't need it, don't buy it.
  • Can you pay off the balance? On all occasions, try to pay off the remaining balance on your credit card each month.
  • What is the interest rate? Make sure you are aware of the interest rate before applying for the card.
  • No annual fees! Try to avoid applying for credit cards that charge annual fees just to have it.
  • No store cards! Avoid applying for store-specific credit cards as they typically have high interest rates and can only be used at that particular store.
  • Check for student credit card options. Many credit card companies have low-interest credit card options for students with little to no previous credit history.

Why Should You Care About Your Credit Report and Credit Score?

What is a Credit Report?

A credit report is a detailed account of your credit history. It is an important measure for your financial reliability. Your credit report can be used in many different situations including applying for a credit card, buying a car, renting an apartment, buying a house, and, in some cases, applying for a job.

You can request a free copy of your credit report once per year from each of the three main credit reporting bureaus:

What is a Credit Score?

Credit scores reflect the financial trustworthiness of a borrower. A higher score signals that a consumer is less of a financial risk to the creditor. Credit scores range from 300 (poor credit) to a maximum of 850 (exceptional credit). Having a good credit score has some major advantages including, higher credit/loan limit approvals and lower interest rates.