Growing Up

New college grads face a whole new world, so it’s a good idea for them to be as financially stable as possible. One key to making that happen? Building credit. Here’s how recent graduates can get started.

Start Using a Credit Card

Credit cards are a vital part of financial health. New college grads should open an account and charge a few items that they are capable of paying off entirely. Each month that the account is used and paid off will help build credit.

If your college grad isn’t able to open their own account, there are options. They could apply for a secured credit card. This is a great way to build credit because they place a refundable down payment that they then borrow against. This money also acts as the credit card’s limit. Your grad can then use the secured card just like a credit card and slowly build their credit. Just make sure the card reports activity to the three major credit bureaus. Some even pay interested on your deposit.

Another option for grads who can’t open their own credit card account is to sign them up as an authorized user of your card. This allows your kid to make purchases on your account as if they were the primary user, and build credit based on the account’s positive activity. Even if your kid doesn’t make purchases and payments, they’ll build credit via any activity you conduct.

Pay The Bills

As USA Today notes, make sure your college grad is paying all their bills on time. Payment history is a huge factor in credit scores. If they need help, have them automate bill payments to make things easier.

Report Rent Payments

Another great way for a college grad to build credit is to make sure their rent payments are reported to the credit bureaus. That’s something your kid will have to negotiate with their landlord, because there’s no requirement for apartment owners to report payments. However, timely rent payments will help build credit, so it’s worth trying to make that happen. There are some third-party services that can help facilitate this as well.