There are lots of classic catch-22s in life. You need experience to get a job, and you need a job to gain experience. You lose your glasses, but you need your glasses to keep looking for them. Perhaps worst of all, you need to have credit in order to build credit. So how on earth are you supposed to actually start building credit?
This unfortunate credit catch-22 leads a lot of young adults down a path of not building credit at all. Some people decide that getting approved for a credit card in college is too much of a hassle to begin with. Others might get rejected for a few cards before giving up. And far too many are told by their parents that building credit in college isn’t something they should be doing at all.
Why is building credit so important?
There are tons of reasons why building credit is important. A good credit profile and credit score can help you get an apartment after you graduate. It can help you pay less for your student loans. It can help you get a lower interest rate when it comes to buying a house or a car. It can even be instrumental when it comes to getting a job after college.
Those are all things that a good credit score can get you. But if you’re starting from scratch with no credit history at all, or if you’re starting after only ever having been an authorized user on your parent’s account, starting to build your credit is even more important.
Let me explain further. If you haven’t started building credit on your own, your credit profile is nonexistent - that’s not a good thing. While it might not seem like a big deal, this can signal a complete lack of responsibility and financial literacy. By starting to build credit, you’re taking a massive step in the right direction. Your credit score won’t be amazing right off the bat, but even a few months of on-time payments is better than none at all.
Another reason to start build credit now is the simple fact that building credit with a Fizz card is easy and hassle-free. Unlike a normal debit card, Fizz is more secure and gives you the opportunity to earn cash back on purchases that you would’ve made anyway. So if you don’t start building credit as soon as you get to college, you’ll miss out on tons of different benefits.
How do I get started?
Student credit cards suck. They’re unreasonably hard to get approved for as a college student with no prior credit history, they have confusing terms and conditions, and they charge crazy interest rates and fees. If for some reason you decide that a typical student credit card is right for you and you manage to get approved, you’ll need to stay extra diligent when it comes to using it. Even a small slipup could leave you under a mountain of fees and debt - and with a bad credit score.
There are other options too, but they have their downsides. You could ask a parent or guardian to cosign on a card for you - if they’re willing or have the credit and willingness to back you. But not all cards allow cosigners, and even then you’re not guaranteed an approval. You could also apply for a secured card, but you’ll need to lock up your money for months, even years at a time. Plus, a secured card won’t have as robust of an effect on your credit score.
Student loans also have the ability to help build your credit score, but it’s important to understand the implications. Since most student loans are deferred until after you leave school, most of them won’t factor into your credit profile until you start repaying them - and you want to start building credit long before then.
The most sensical option is to start building credit with a Fizz card. Fizz doesn’t have any interest rates or fees. It links to your bank account to keep you from overspending, and your purchases are paid off on a daily basis so you can’t run up large balances and go into debt. On top of it all, Fizz doesn’t check your credit when you sign up, so you don’t have to worry about being rejected. Simply put, it’s the superior way to build credit as a young adult. There are no downsides. There’s just the opportunity to build credit, earn rewards, and build for your financial future. Download the Fizz app today and get started building your credit!
Sam is a Kenyon College alum and is head of content at Fizz. He's been a go to personal finance resource among his peers since getting his first credit card during his sophomore year of college. He hails from Washington, DC, loves all things aviation, and currently lives in Los Angeles.