Top Reasons Why College Students Should Start Building Credit

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Navigating the world of credit may appear complex, but it is simpler than you may think. Envision credit as your financial report card that influences opportunities both now and after you graduate. While it can be tempting to delay your credit journey, the reality is that starting credit building today is a smart financial decision. Rather than waiting until graduation, explore the top four reasons why college students should prioritize building credit now, with a secured credit card as a reliable ally on this financial mission.

1. Better Student Loan Interest Rates

It’s important to start establishing your credit score now so you can reap benefits as soon as you graduate. When (or if) you refinance your student loans with a private lender, having a solid credit history will translate to better interest rates. In fact, your credit score directly influences the interest rate, so aim high—a higher score can potentially lead to monthly savings of hundreds on student loan payments.

2. Employment Opportunities

Your credit history can give you a strategic advantage in the job market. Employers, especially in fields like law enforcement, accounting, temporary services, and even military roles, review credit histories as indicators of financial responsibility. A strong credit record is a positive signal of personal accountability and work ethic, offering you a competitive edge over other applicants.

3. Renting an Apartment or House

One day you will have to say goodbye to your college dorm or your parent's home. Transitioning to independent living typically means renting an apartment, and landlords often assess credit scores to gauge your responsibility. A good credit score is your ally, improving approval odds and sparing you from extra security deposits or flat-out denials. It is a small but vital step towards hassle-free post-college living arrangements.

4. Car Finance and Insurance Savings

Building a positive credit history throughout your college years can pave the way for a smoother experience when it comes to purchasing a car. This road may lead to better car loan terms and favorable insurance rates. Afterall, lenders and insurers value responsible credit use, so having timely credit payments can make all the difference. Without credit card activity, you might face higher interest rates or challenges securing a car loan.

What is the Best Credit Card for College Students?

For college students just stepping into the credit landscape, we suggest secured credit cards as a tool to help build credit in a simple and practical way. For instance, Armed Forces Bank’s Credit Builder Secured Visa® Credit Card is linked to a cash deposit that becomes your spending cap and acts as your safety net in case you accidentally miss a payment.

What sets this card apart? It's not just about spending responsibly; it's about building a payment history that can give your credit score a nice boost. Plus, this card ensures your credit-building efforts are rewarded with automatic reporting to the three major credit bureaus.

Key features of Credit Builder:

  • Customize your own credit limit, between $300 and $3,000
  • Add to your credit line in $50 increments
  • No annual fees
  • No application fees
  • No over-limit fees
  • Automatic reporting to the three major credit bureaus to help you build a credit history
  • Additional security with EMV chip technology
  • Faster and more secure online transactions when you enroll in Visa® Checkout

Get an early jump on building credit history and fortify the path for post-grad financial success. As your next step, explore the best credit card for college students, read into our credit tips, or use financial calculators for additional guidance, including the Armed Forces Bank Credit Assessment Calculator and the Credit Card Payoff Calculator.

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Subject to credit approval. Transaction and Penalty fees apply.  Credit Builder Savings account required.  $5.00 quarterly fee charged to the Credit Builder Savings account if not enrolled in eStatements. Improved credit score is not guaranteed. Credit score is determined by credit reporting agencies based on multiple factors, but satisfactory performance on a credit card product can improve your credit score. Default on a credit card, including missed or late payments can damage your credit score. Once added, funds cannot be withdrawn from the Credit Builder Savings account and the Credit Builder credit card without closing the savings account and the credit card.