Creditless Students Can Still Build Credit Histories
You may associate college with tests and term papers, but it's also the ideal time to build credit history.
After all, if you're like many students, college represents your first steps into the adult world - living on your own, working a job and planning for the future. What better time to start building your financial foundation?
Traditionally, it's been difficult to obtain credit without an established credit history, creating a catch-22 for college students. However, alternative credit reports are opening doors to students looking to build credit history.
Transforming Credit Calculations
According to Jonathan Fox, director of Iowa State University's Financial Counseling Clinic, alternative credit opportunities allow college students to demonstrate financial stability and build credit histories.
"It's not as much a policy change that stands to help college students as alternate types of scores that will use other bills that college students and young people more typically have, like cell phone bills, cable bills or a utility bill," Fox said in a May report. "If they can show credit responsibility in those ways, that could add to the score."
The report stated the three primary credit reporting agencies - Experian, Equifax and TransUnion - will implement changes this summer intended to enhance credit report accuracy and consumer protections. However, the three national credit bureaus are not the only ones to keep in mind.
Building History Through Alternative Credit
Alternative credit reports feature information regarding financial obligations college students are more likely to have, such as rent, internet, phone, insurance and utility bills. By setting up accounts with alternative credit agencies, college students can link their various subscription accounts to create free reports and receive alternative credit scores.
While building a credit history may not seem essential to some college students, experts agree it plays a more significant role in their lives than students may realize.
"It's going to impact even while they're in college the insurance rates they're paying if they've moved independent from parents or guardians, for example," Fox continued. "Of course, it's going to impact them as soon as they seek any sort of structured loans, to buy a car, to buy a home."
Don't let being creditless leave you at a disadvantage. Explore new opportunities and your options to build credit history.