How to Start Establishing Credit: From One Student to Another

Young woman in living room reviewing papers

Being that I’m the only person in my group of friends that works in banking, I frequently get asked financial advice and recommendations to help with any given situation. I have one friend who is a 21-year-old college student who is relatively new to the work force. He has no credit to his name and had asked me why having credit was so important in the first place.

After taking a minute to gather my thoughts and facts, here’s what I told him:

“Your credit history is very much like your high school transcripts- they reflect the responsibility and workload you’re able to handle and when you submit those scores to your desired school, they’ll decide if you can handle the new responsibility. So when loan processors and employers are pulling credit, they are checking to see if you’re a responsible candidate. It’s important to establish credit at a young age, as it reflects a long, consistent history as to just how responsible you are. The better your credit score, the easier it’ll be getting approved for auto loans, mortgages, and employment opportunities.”

He scratched his head and then asked what the best way would be to go about establishing credit would be.

My response was:

“There are lots of ways to establish credit. As a college student, you can start by having your parents include you on one of their loans. For instance, if they planned on getting you a car for graduation you could ask to be joint on the loan with them, and even offer to make payments now and then. This is a great way to start building credit, and learn the responsibility of paying down a loan.

Another way to establish credit is to apply for a credit card. But be careful with this one; a credit card is not the same as a debit card. Your debit card will pull the available funds from your account immediately upon purchase. A credit card is what you would use if the funds aren’t readily available, so your bank is loaning you the money, but expects you to pay it back soon. So don’t spend more than what you can afford.

Each credit card is different too, so it’s important to find one that best fits your lifestyle. Some things to look out for are low interest rates, low or no annual fees, and some that give you rewards like airline miles.
According to, establishing credit becomes much more difficult after graduating college. By then, lenders who will rely on your credit history to make decisions about your application will have a hard time qualifying you for credit cards and other loans.

Experian also mentions that college students are prime customers because they are more likely to be financially successful and loyal over time.

So bottom line is, if you haven’t started yet you should definitely consult with your parents and/or a financial consultant to see what you can do about trying to establish credit. You’re the perfect candidate, and it’ll end up saving you money in the long run if you’re able to start your credit history at an early age.”

Hopefully some of the insight in this conversation gave you a little more clarity about entering the vast world of credit. If you have any more questions, feel free to stop by your local Greater Nevada Credit Union to find out all the ways you can start establishing credit today, like with our First Time Car Buyer Program.

Check Nerd Wallet’s article, “How to Build Credit” and our Financial Education Resources page for additional resources and other ways you can build credit.