Your child is heading to college—or maybe they’re already there—and you’re likely thinking about more than just tuition and textbooks. Building a solid credit history during these years can help set your student up for success long after graduation, potentially making it easier for them to rent an apartment, finance a car, or qualify for competitive interest rates on future loans.
The challenge is that most college students have little to no credit history. According to the Consumer Financial Protection Bureau, 2.7% of adults are credit invisible, meaning they don’t have enough credit history to generate a score at all. But for incoming college students, that number can be upwards of 80%.
Among young adults who have a credit history, the average credit score for those ages 18 to 27 sits at 681, according to Experian data. That lands at the lower end of the “good” range. As a parent, you can play a meaningful role in helping your student establish healthy credit habits before they enter the workforce. Here are some steps you can take.
Tips for Kickstarting Your College Student’s Credit
1. Start With the Right Foundation
Before diving into specific credit-building strategies, it’s worth having an open conversation with your student about how credit works. Many young adults enter college without a clear understanding of concepts like interest rates, credit utilization, or how payment history affects their score.
This doesn’t have to be complicated. Focus on the basics: credit is essentially a measure of how reliably someone repays borrowed money, and that track record follows them for years. When your student understands that the financial decisions they make now can affect their ability to rent an apartment or buy a car after graduation, they’re more likely to take credit-building seriously.
2. Add Your Student as an Authorized User
One of the simplest ways to help your student build credit is by adding them as an authorized user on one of your credit cards. When you do this, your account’s payment history typically appears on their credit report, which can give their score a boost—especially if you’ve had the card for several years and consistently made on-time payments.
Your child doesn’t actually need to use the card to build credit. You can simply add them to your account and keep the physical card somewhere safe. If you do give them access, establish clear ground rules upfront about acceptable purchases, payment responsibility, and due dates.
3. Consider a Secured Credit Card
A secured credit card can be an excellent tool for students who are ready to manage their own account. Unlike traditional credit cards, secured cards require a deposit, typically starting at $200 and equal to your credit limit. This deposit reduces the risk for the card issuer and makes approval easier for those with limited credit history.
As your student uses the card and makes on-time payments, they build a positive credit record. Over time, they may qualify to upgrade to an unsecured card with better terms or a higher credit limit. The key is responsible use: paying the balance in full each month and staying well below the credit limit.
4. Explore Student Credit Cards
Many credit card issuers offer cards specifically designed for college students. These cards typically have more lenient approval requirements and may include benefits like cash back on purchases or welcome bonuses. Most importantly, they don’t require a security deposit to get approved.
A student credit card can be a stepping stone to more robust credit products after graduation. If your student uses the card responsibly throughout their college years, they’ll have a solid foundation when it’s time to apply for other forms of credit.
5. Protect Their Credit Before It’s Established
Identity theft isn’t just an adult problem. Because children typically don’t have credit reports, identity theft involving minors may go undetected for years. A thief could open accounts in your child’s name, and you might not discover the damage until years later when they apply for their first credit card or loan.
Consider placing a credit freeze on your child’s credit report with each of the three major bureaus (Equifax, Experian, and TransUnion). This freeze prevents anyone from opening new accounts in their name.
Thanks to federal law, credit freezes are free to implement and can be lifted when your student is ready to apply for credit. It’s a simple step that can save significant headaches down the road.
6. Teach Healthy Credit Habits
Once your student has access to credit, the real work begins. Here are the habits that tend to matter most:
- Monitor credit regularly. Encourage your child to sign up for a free credit monitoring service, preferably one that offers access to their FICO score and at least one of their credit reports, so they can track their progress. They can also get free weekly credit reports from all three credit bureaus through AnnualCreditReport.com.
- Pay on time, every time. Payment history accounts for roughly 35% of a FICO score. Setting up automatic payments or calendar reminders can help your student avoid missed due dates.
- Keep balances low. Credit utilization—how much available credit is being used—is another key factor. Financial experts often recommend keeping utilization below 30%, but people with excellent credit tend to stay below 10%.
- Limit credit applications. Each application typically triggers a hard inquiry that can temporarily lower their score. Apply only when genuinely needed.
Student Loans Can Build Credit, Too
If your student has federal or private student loans, those accounts also appear on their credit report. Making on-time payments—even small ones while still in school—can help establish a positive payment history.
Some students choose to make interest-only payments or small principal payments during college to get ahead on their loans and build credit simultaneously. This approach isn’t right for everyone, but it may be worth considering if your family’s budget allows.
Setting Your Student Up for Success
Building credit during college isn’t just about potentially qualifying for better interest rates in the future—though that can certainly be a benefit. It’s also about developing the financial discipline and awareness that may serve your student throughout their adult life.
As a parent, you have the opportunity to guide this process. Whether that means adding your student to your credit card, helping them open a secured card, or simply having regular conversations about money, your involvement can make a meaningful difference.
Ready to explore financing options for your student’s education? ELFI offers private undergraduate student loans and parent loans with competitive rates and flexible terms. Check your rate today to see how we may be able to help bring your family’s educational goals into focus.
