Why Build Credit When You’re Young?
It’s easy to assume that building credit is only important once you reach adulthood, especially when fulfilling eligibility criteria for competitive home loan rates. However, building credit can also be important when you’re young and heading off to college for the first time. While you might not yet have many real-life responsibilities, giving your credit score some attention might be worthwhile when you realize its importance for the following reasons:
To Get a Cell Phone
You might not need to start building credit to buy your first home just yet, but at least consider it if you’re leaving your family plan and opening your own cell phone account. Many cell providers require you to have a good credit score because they’re taking on a level of risk to lend you money for a phone and their ongoing service. While you might still be able to sign up with a provider with poor or no credit, you might not receive the level of service you anticipated with an inferior provider.
To Sign On for Utilities
Many students enter dorm rooms when they head off to college, so paying utilities isn’t something they have to worry about. However, if you’ve decided to rent an apartment while receiving a college education, you’ll likely need to explore your electricity, gas, and water payment options.
Utility providers check credit scores to gain insight into their customers’ payment history. When you sign up to receive their services, you’re effectively applying for credit since you receive a bill once you’ve already used a month’s worth of utilities. As a result, a poor credit score can sometimes make it harder to be accepted by particular companies.
To Enjoy Competitive Car Insurance Rates
If you don’t live near your college campus, you might be shopping for a new car to make navigating your town or city much more straightforward. After all, public transport isn’t always readily available or reliable.
You might assume a good driving history is all you need to be considered for competitive car insurance rates, but good credit might also be a requirement. Many car insurance companies check credit scores to potentially predict the likelihood of you being involved in a car accident or the need to make a claim. Work on improving your credit score before purchasing a car and insuring it, and you might benefit from more affordable rates.
To Have Your Apartment Application Approved
While a low credit score won’t necessarily mean that you won’t be able to find affordable housing, it might mean some landlords might be less likely to rent their apartments out to you. Some might even ask for a higher security deposit based on a poor credit score or lack of credit. When landlords check credit scores, they typically review how likely you are to pay your rent on time each month. If your score is low, they might see you as a risky tenant.
Building a credit score when you’re young can be more important than you think. When leaving the family home and starting your college education, start looking at ways to boost your credit score. You might be surprised by how much impact it can sometimes have on everyday life.