Credit scores. Credit cards. Credit history. If you’re an international student heading to a college or university in the US, these three things aren’t likely to be high on your agenda. You’re too busy packing, organizing your travel, dealing with visas, and preparing for the semester to come. If you're not an incoming freshman, you may have tried to get a credit card in school, and faced difficulty when submitting the application. After all, school doesn't teach you about credit, so don't beat yourself up
While it’s important to enjoy college and live in the moment, don’t neglect your credit score. In the US, it determines your trustworthiness for future loans – like buying a car or house. It can even dictate how whether or not you'll pass the background check for certain jobs.
If you intend to live and work in the US after graduation, building up your credit score isn’t optional; it’s a necessity.
What is a credit score?
A credit score is a number between 300 and 850. It indicates a person’s creditworthiness, i.e., how good they are with money, and how likely they are to pay back a loan.
Five factors determine your credit score:
1. Payment history
The average speed and quantity of repayments on a line of credit (like a credit card). Late payments, and fees and charges due to breached credit conditions are all taken into account and could hurt your score.
2. Credit history length
The longer your credit history, the more reputable your score. It’s one of the key reasons why students need a credit score sooner rather than later.
3. Amount owed
The quantity of outstanding money you still owe. For example, a maxed-out credit card isn't doing you any favors.
4. New credit
Have you opened any new accounts? Opening too many new accounts can be viewed as an indicator of an unreliable person.
5. Type of credit in use
What are the forms of credit taken out? For example, credit cards, student loans, and more.
All these factors are influenced during your time as a student. Starting to build a reliable credit score now will have massive impacts going forward. Think about any facet of life: developing a reputation for reliability takes time, so it's better to start now.
Creditors want to know the money they are lending will be repaid on time. Landlords want to be sure they can depend on you to pay rent when it's due. That’s what a strong credit score tells them. It’s a numerical reflection of a person’s past choices. Otherwise, creditors risk losing the money they’ve invested.
How to build your credit score
As a student, not all ways to build credit are viable. However, there a few simple solutions to start building your credit score. Remember, building your credit score is all about demonstrating responsible credit behavior over time. Indeed, credit history length is 15% of your credit score.
Here are some suggestions:
Start building credit with a debit card.
Fizz is the first debit card that helps students build credit. Unlike credit cards, there are no hidden fees, interest, or terms you need a PhD to understand. Fizz was created by international students, for international students, and you can apply without an SSN. On a mission to build the financial ally for young adults, we're starting with making credit building easy and fun. The best part? Fizz gives you access to special discounts on campus and can be used everywhere Mastercard is accepted.
With these simple steps, you can start building an excellent credit score while you study. So, when you graduate, you’re ready to pursue your dreams.
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.