Building Credit After Graduation

The period following college graduation can be a large financial transition for recent graduates. Some may be searching for employment while others are contemplating purchasing their first car or renting an apartment. The reality remains that most of these transitions require a history of credit. Building credit is not as difficult as it may seem and there are many small measures young adults can take to establish a positive credit standing.

Opening a checking or savings account may not directly affect building a credit foundation. However, it is a stepping-stone. Most lenders will ask potential borrowers if they have those types of bank accounts on credit applications, National Foundation for Credit Counseling vice president Gail Cunningham told

Applying for a secured credit card may help recent graduates build their credit file, reports MSN Money. Cardholders typically put down a deposit in the amount of the credit line. Opening small store accounts, such as a gas or department store card, are other options for establishing credit, according to MSN Money.

Consumers who apply for credit cards should protect their credit by spending no more than 30 percent of their limit and paying the balance in full each month, MSN Money reports.

Borrowers should be wary of applying for too much credit at once, which may suggest to lenders that they are “desperate for credit,” Cunningham told the website. Applying for multiple lines of credit will also raise the number of inquiries on a credit report, which can negatively affect a consumer’s score. Opening one or two small lines of credit will suffice, reports MSN Money.

Young adults who have not had the opportunity to establish a credit history may want to consider asking a parent to co-sign for a credit card or large purchase. Having a co-signer will allow the consumer to secure a loan and build their financial standing. The primary account holder should bear in mind that late or missed payments will negatively affect their co-signer’s report as well as their own.

Lastly, consumers should obtain a copy of their credit report to ensure that all the information listed is accurate. Lenders will use the report to determine eligibility and rates on loans, which will affect a consumer’s finances in the long run. Young adults should get into the habit of monitoring their credit and obtaining a copy of their report once every year.