What is the best way to build your college student’s credit score? Get them a credit card! Actually, get them a credit card, but do not give it to them.
Capital Budget Strategies, LLC, Austin’s best Financial Coach, can help you and/or your college student get financially organized. Our Money Coach, will show you how to pay off debts, build an Emergency Fund, handle credit cards responsibly and start saving for retirement! Our price is $149 for professionals and $99 for a college students or recent grads. All sessions are via Zoom Video Conferencing, so you do not have to leave your kitchen table! But be aware, are sessions are intense! Give us approximately 4 hours and we will help you win your retirement.
When my niece was a freshman in college, we had an honest discussion about credit scores and credit cards. She obtained a card with a low $500 limit, which is offered to individuals with no credit history. Make sure the card has no fees and there are no rewards attached. Remember, if “reward cards” did not make the credit card companies money, they would not exist! Though they sound great!
So here is your plan: With your college student’s understanding and consent, get them a credit card, but YOU keep it, and you use it.
I used my niece’s credit card to purchase gas for my car. I also set up an “automatic payment” with my bank, so the monthly balance was always paid off. After 4 years (48 months) of paying the monthly balance on time, she graduated with a credit score in the 800s. Yikes, that is excellent credit for anyone, especially someone only 22 years old.
I presented the card to her as a graduation gift. She kept the $1,000 limit to ensure she could pay the balance off monthly, until she got settled into her career and felt financially savvy enough to handle a higher-limit card.
This is not a “joint” card, but a single card in your student’s name only. It is very important that you have their permission to use the card for your personal purchases and pay off the balance every month.
Your college student will thank you in four years – and they may even have a better credit score than you!
Contact Capital Budget Strategies LLC, Austin’s best Financial Coach, to learn more about how we can help you and your family become financially secure.
Question or Comment? Enter it below.