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Building your credit: What to do as a student?

Posted on Tuesday February 08, 2022

Building your credit: What to do as a student?

As a student, you have so much to look forward to: your first job, your first car, your first house—maybe even your first business! Start building your finances today and you’ll have the credit history you need to achieve all your biggest goals in life.

Here are four ways to improve your credit score so you can go ahead and buy that great little cottage in Petit-Rocher.

Establish your credit history 

You can’t score goals when you’re sitting on the bench! To get a good credit score, you have to actively use credit. Lenders use your credit history to determine your creditworthiness.

Building credit takes time

Building a good credit history is a matter of time—the longer you’ve had your accounts and financial products, the better your score. Good credit experience and financial habits will protect you and help you make those big financial decisions. So getting a student credit card is a great way to jump-start your credit history. As long as you use it properly, of course!

Thinking about closing your old bank account?

Don’t! Even if you think you don’t need it anymore, consider using it from time to time to keep it active. If you transfer all the funds from an old bank account to a new one, prospective lenders will no longer be able to see those years of financial existence.

Develop good credit habits

Remember that friend you used to lend your books to and then you’d never see them again? You wouldn’t want to go through that experience again, right? Banks feel the same way—showing that you’re a good borrower will improve your credit score, making it easier for creditors to trust you.

5 habits a good borrower should have:

1. Make the minimum payment (full payment if possible) by the due date

2. Make sure you have enough funds for preauthorized payments

3. Pay back loans, even if they’re interest-free (e.g., student loans)

4. Pay off credit card balances every month

5. Make payments even if you intend to contest a charge (you can contact the company later)

How long does a loan default stay on your credit report?

Defaulting on a loan is a bit like breaking a mirror: it’s a 7-year curse. In all seriousness, that’s how long negative information stays on your credit report according to the Financial Consumer Agency of Canada. So next time you get your monthly cell phone bill, be sure to make your payment on time!

Diversify your financial products

If you want to build and improve your credit score, don’t put all your eggs in one basket. You can easily diversify your credit portfolio while respecting your borrowing capacity—there’s no need to take out a big loan like a mortgage. As a student, you have access to a wide range of interesting products that are designed to fit your lifestyle.

A student loan to achieve your academic ambitions

That’s right, a student loan can help! You kill two birds with one stone: you pay your tuition and you improve your credit score. As long as you remain in good academic standing, the governments of New Brunswick and Canada will be there to support you.

A student line of credit for unexpected expenses

Keeping up with your studies, assignments and exams is obviously very demanding. It’s important to stay focused, and a student line of credit allows you to do just that. The benefits? You can pay back your line of credit at any time during your studies, in full or in part, according to your ability to pay. You can use it to cover unexpected expenses, big or small, with a lower interest rate than a credit card. Your credit limit is based on many factors, including field and years of study.

A car loan for worry-free driving

Is your old manual car louder than a plane when it hits 50 km/h? If so, did you know that you can get a car loan without even leaving the dealership? If you’re on a tight budget, you can pay it back over 6 months to 8 years, depending on the type of vehicle you purchase. And all the while you’ll be driving up your credit score!

Choose the right credit cards

If you’re thinking about getting a second wallet so you can hold even more credit cards, it may be time to rethink your approach. When it comes to credit cards, quality is always better than quantity. Resist the urge to jump on all those loyalty card offers promising discounts on your purchases. The more you apply for credit, the lower your score will be. Even if you stash the cards away the second they arrive, your credit score will take a hit if you apply for that many. Are the rewards really worth it?

Student credit cards tailored for your lifestyle

As a student, you can get a student credit card with very attractive rates and terms at your financial institution. In addition, student discount cards allow you to travel anywhere in the world with 3 days of free travel insurance. That should keep you motivated until you graduate!

Follow these four golden rules and your credit score will no doubt reach new heights. Now all you have to do is focus on your classes, earn your degree and get started on your financial plans! 

You might also like :

A financial cooperative that is here for students
The student line of credit: A tool that lets you focus on your studies
Learning to manage your student debt

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