Building a Credit Record After Graduation

If you are a recent college grad, you may be discovering that you are having a difficult time finding a place to live, getting a loan, or even landing your dream job despite the fact that you have a college degree in hand.  If you are finding that your lack of credit history is holding back, there are a few steps you might want to take in order to help build that history up.

One of the first things you can do in order to create a more solid financial standing is to open a bank account.  Although the status of your bank account is not reported on your credit report, having a bank account in good standing helps give you an ally in the world of finance as your bank can vouch for your responsibility.  Make sure you handle your account responsibly and do not overdraw your account if you hope to have your bank give you a good recommendation or to approach the bank later for a loan.

Another simple step you can take is to apply for a department store credit card.  Even if you don’t have a credit history built up, you can typically still get approved for a department store card.  The credit limit likely won’t be too high, but that is ok.  Just as long as you have a card that you can make purchases with and repay on a regular basis.  By simply putting your regular purchases on the credit card – and repaying your debt on time – you will be taking great steps toward building a better history of your credit.  In addition, department stores often offer nice perks to their cardholders, such as discounted prices.  Just be sure to pay the card in full each month in order to avoid paying high interest rates.

Before you go applying for a department store credit card, make sure the company reports to the major credit bureaus.  Otherwise, they will do nothing toward helping you build a credit history.

In order to really help improve your credit score, try not to spend more than 30% of your credit limit.  For example, if you have $1,000 in credit, try not to borrow more than $300 at any one time.  With the algorithms used by the credit bureaus to determine credit scores, you will receive a higher score if you stay within this parameter.

Finally, if you can’t get approved for a department store credit card, look into getting a secured credit card.  You will have to put down a deposit in order to get one of these cards and you will likely have to pay additional fees, but it will be worth it when your credit score goes up.