4 Tips to Start Building Credit in High School

5 minute read

As a high school student, you’re busy doing classwork, hanging out with friends, and making plans to attend college. You probably haven’t had much time or reason to think about what credit is. However, you may have seen ads promoting credit cards and wondered if you need to start building credit. In truth, establishing good credit in high school can have significant benefits down the road.

What Is Credit?

Credit is essentially a system of financial trust. It measures how responsible you are with borrowed money. When you apply for a loan, sign a cellphone contract, or even rent an apartment, lenders and landlords want to know if you can be relied on to pay your bills. One way they determine your creditworthiness is by looking at your credit score.

A credit score is a numerical representation of your credit behavior. It’s a three-digit number that typically ranges from 300 to 850, with higher scores indicating more creditworthiness. These scores are calculated using a variety of factors from your credit report, including how quickly you pay your bills, how much unpaid debt you have, what types of debt you have, and how long you’ve had credit.

Having good credit isn’t simply about convenience; it’s also about securing your financial future and saving money. A high credit score can lead to lower interest rates on loans, better credit card offers, easier access to housing, and even lower insurance premiums. On the other hand, a low credit score can make it harder to qualify for loans or credit cards and may cost you much more in higher interest rates.

Why Should High School Students Start Building Credit?

Contrary to popular belief, you aren’t simply assigned a credit score when you turn 18. As mentioned above, credit scores are based on your credit report. If you haven’t done anything to establish credit, then you won’t have a credit report.

That may not seem like a big deal, but a strong credit history can make it easier to secure loans and credit cards with favorable terms when you graduate from high school and begin college. Plus, most landlords and some employers check credit reports as part of their screening process, so having a positive credit history can help you get the apartment you want or land a good job.

What Can I Do to Begin Establishing Credit?

Believe it or not, it isn’t as difficult to acquire a credit history as you might think. Here are some tips that will put you on the road to a good credit score:

1. Become an Authorized User: One of the easiest ways to start building credit is to become an authorized user on a parent or guardian’s credit card. This allows you to piggyback on their good credit history and can positively impact your own credit score.
2. Open a Secured Credit Card: Some banks and credit unions offer secured credit cards specifically designed for people with little or no credit history. With a secured card, you’ll need to provide a security deposit as collateral. As you use the card responsibly, your payment history will be reported to the credit bureaus, helping you build credit.
3. Pay Your Bills on Time: Even if you don’t have a credit card, you may have other bills (cellphone, streaming service, etc.). When you pay these by the due date, you demonstrate responsible financial behavior. Remember, late payments can have a negative impact on your credit score.
4. Learn About Credit: Take time to learn how credit works and the importance of managing it wisely. Not sure where to start? The NC Assist Financial Wellness Center has courses, tools, and resources you can utilize for free. The more you understand, the better equipped you’ll be to make your good credit work for you.

Another thing you can do to improve your financial savvy is to start saving. While saving won’t help you build credit, it will help you become more responsible with your money and keep you from depending too heavily on credit in an emergency.

Do I Need Good Credit to Get a Student Loan?

College financing comes in a variety of forms, but many students need loans to pay for higher education. Having good credit can make the student loan process smoother. Fortunately, most federal student loans (which are based on financial need) don’t require a credit check or a co-signer.

On the other hand, private or alternative student loans (like NC Assist) typically do require a credit check. If you don’t have an established credit history, you’ll need someone with good credit to guarantee repayment of your loan. Usually, that’s a parent or guardian who meets the co-signer requirements.

Plan For Your Future

Building credit in high school might not be at the top of your to-do list, but it’s a great idea. Start improving your financial future today. Visit our Financial Wellness Center for more helpful financial resources.