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5 Ways to Improve Your Credit Score While in College

Sep 08,2021 · 4min read · 2374 views

Having a good credit score can be immensely helpful later on in your life. Lenders use credit scores to decide how much borrowers pay for mortgages, credit cards, and auto loans. Insurers utilize credit scores to determine how much to charge policyholders for coverage. Landlords and employers have also rejected tenants and job applicants for low scores. Though these scenarios might not concern you right now, it’s good to keep them in mind because they will affect you sooner or later. Many financial advisers emphasize the importance of building your credit early. So, college is a great time to start. Here are 5 ways you can improve your credit score as a student:

1. Become an authorized user on a parent’s account.

Becoming an authorized user is a popular choice for college students aiming to build good credit. Presuming your parents have good credit habits and good credit scores, ask them to add you as an authorized user to one of their cards. This arrangement lets you build a credit history and gives you access to a credit card. In addition, your parents can keep an eye on your spending habits and let you know if you go off track. If you want more information about becoming an authorized user, you can read this article.

2. Open up your own credit card.

If you can provide proof of income and you are over the age of 21, you can consider applying for your own credit card. Since this will be your first card, look for a card with no annual fee and a low interest rate. It’s also important to remember that when you receive your credit card, the responsibility for handling the card wisely and repaying your debts falls on your shoulders.

3. Shop around for your perfect credit card.

Once you’re able to qualify for a regular card on your own, it’s important to remember that not all credit cards are the same. Before applying for any credit card, make sure it has the most benefits. For example, lower interest rates, no annual fees, reasonable credit limits, and clear billing policies. You can check out our blog post about the best student credit cards.

4. Use the credit card for occasional, small purchases.

And keep your spending in check. Use the credit card for small, tytical purchases. For example, groceries or your Netflix subscription. If you have money from scholarships or student loans, you could use the credit card to pay for bigger expenses, such as textbooks. Always remember the tradeoff: Paying off your card promptly helps your credit score. But missing payments or carrying a hefty balance will hurt it.

5. Automate your payments.

As a college student, you have a lot on your plate — exams, papers, labs, part-time jobs. So, keeping track of your credit can get a bit unwieldy. Forgetting to make payments can do some damage to your credit score. You can foolproof your payments by asking your credit card issuer to withdraw the payment amount on the due date every month. If you opt for this payment method, however, make sure you have enough money in your checking account to cover your credit card payment. If you need more information about credit scores, credit cards, debt, feel free to check out BetterCreditBlog.org.

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A Beginner’s Guide: How Do Credit Card Rewards Really Work?

May 27,2021 · 4min read · 1737 views

Credit card points are one of the three main types of credit card rewards, along with cashback and miles. Many credit card companies these days offer rewards as an incentive for people to pick their card over another company’s card.

How do credit card rewards work?

Some might wonder where this “free” money comes from. The money for customer rewards is paid for by the customers and merchants themselves. The short answer is that rewards are funded by fees and interest paid by the customer and by merchant fees that are included in prices. The latter part of this, called “interchange” might not be as familiar a term as “interest” or “fees” to some people. This is because “interchange” is basically invisible. When you use a credit card at a business, the merchant has to pay a fee to accept the payment. A percentage of this fee (usually 1%-3%) goes to the card company along with a flat fee. These fees that go to the card company are interchanges.

Rewards are thus related to interchange because both are a percentage of the purchase. Some card companies take in a similar percentage in an interchange that they are also given as rewards. Other times, the interchange doesn’t measure up to the cost of the rewards. This is why some companies only reward you if you spend more than a certain amount, but less than another amount. Other card companies are willing to take the loss that the difference between the interchange and the rewards creates. Oftentimes, they can attract enough customers to offset the cost because their customer pays enough interest in the long-term.

Now that we know how rewards are funded, it’s time to take a look into making the most of your credit card rewards. Here are some steps to take when considering the rewards credit card companies offer.

1. Research the right card for you

Everyone has different needs and different types of lifestyles depending on their financial footing. You should research a card with a rewards program that best aligns with how you spend your money. For instance, if you tend to travel a lot, you could benefit from a travel card with points that help to pay for flights and hotels. If you have a family, on the other hand, cards such as American Express can help you earn cash-back at stores you go to a lot such as the supermarket.

2. Use your card as much as you can and make payments on time

If you charge almost if not all of your purchases to your credit card, you can get the most out of the card. Many reward cards offer points, miles, or cash-back on every dollar spent. Thus, the more you spend, the more rewards you are eligible for. It is also important to remember to pay off you credit card bill on-time every month as interest incurred will dramatically decrease the rewards.

3. Use many cards

Using multiple credit cards can help you get the most rewards. You might consider having one card you use on a daily basis with another one dispersed between. Another great option could be getting a credit card through a store you frequent a lot as it could help you save a lot of money.

4. Discover everything the card could do for you

Cards often have hidden perks that many consumers don’t know about. For example, if you have a Delta SkyMiles Platinum American Express Card, you can save 20% on meals and entertainment during your flight. There are usually different tiers within different networks.

Resources

https://www.nerdwallet.com/article/credit-cards/where-does-money-for-credit-card-rewards-come-from

https://www.nerdwallet.com/article/credit-cards/make-most-rewards-credit-cards

About Vola:

Vola supports over 6000 banks and credit unions and uses one of the nation’s largest bank connection providers to securely establish a link to your account.