5 Tips For Students To Make a Good Credit Score

It may sound weird to know about creating a credit score right from this age as a student. 

But that’s true. Making your credit score makes you independent in the early stages of your life. You can get financial support in future easily without hassle. 

Let us know five tips that you must follow:

Proper use of credit card: If you have proof of income, own a credit card. There are certain banks and credit card companies that provide credit cards for college students without income proof. These types of credit cards are tailor-made, and one can easily qualify for them. These cards are available with a low credit limit of Rs.15,000. One can start using credit cards, paying fuel expenses, buying books, enrolling for a course, etc. However, the bill must be repaid within a timeline, and reckless spending should be avoided. One can also take a secured credit card that is linked to the deposit account. This would enable you to create your credit score. 

One has to take loans to build a good credit score in the credit rating report. It is generally done by taking loans and repaying them through EMI. Making a credit score through a credit card is the easiest and cheapest way. If you take a loan, you have to pay interest on the loan, but in the case of a credit card, no extra charges or interest are paid if the repayment is made within the due date. 

Avoid big-ticket purchases: If you buy goods or services on credit through credit card, make small and regular purchases. For example, pay utility bills or fuel bills. Manage to keep credit utilisation as low as possible. It helps you manage funds in an emergency and avoid dragging down the credit score if you cannot afford a substantial amount of bill.

Take advantage of education loans: An education loan is a great way to start creating your credit score. Education loans generally take the student as a cosigner. Hence, the repayment of education loans without fail will make a good credit score. To keep a healthy credit score, the repayment of EMI must be made at least on or before the due date. The benefit of an education loan is that it can be obtained based on your cosigner’s credibility and income proof. The education loan generally comes with a moratorium period. Hence, one has to take care of the date of starting the repayment of the loan. 

Never cosign for friends: You may sometimes want to cosign with your related people, namely parents or guardians. Similarly, some of your friends may require you to be the cosigner for their loan requirements. One should avoid such practices. Any default in repayment of the loan by them shall hit your credit score as well. In a situation where the primary borrower defaults, the cosigner or the guarantor must repay the loan. Hence, avoid such a situation where you end up with a bad score and later, either you do not receive further loans or receive loans at a higher rate of interest.

Start saving early: Starting to save early inhibits good habit at an early stage. And it is the best thing if anyone learns saving at the student age. It helps to create a good amount of money until they are matured enough to spend. It develops a sense of discipline, and one can benefit in the long term to establish good credit.

Hence, start early savings, spend in a disciplined way, create a good credit score and become financially independent.

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