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For a young person, the ability to build good credit, and use it wisely simplifies his or her transition to adulthood. The economy is pretty much based on one’s ability to borrow money to not only survive but also pursue financial growth and independence. A person’s credit worthiness is determined by his credit score and it is the key to one’s financial life. It is the single most important detail that lenders use to either approve or reject a credit request. As such, students need to equip themselves fully in preparation to conquer the world after graduation.

This article highlights top 10 tips on how students can establish good credit.

1. Use credit wisely

Understanding how credit utilization works, as well as how to make it work to your advantage significantly helps in building good credit. Credit utilization is the percentage of the amount of the credit used within a given billing cycle in relation to the available limit. If your credit utilization is higher than the acceptable limit, it sends signals to credit agencies that you are biting more than you can chew as far as debt is concerned. This can negatively impact your credit score in which case you would need to repair it. The catch is to make sure that your credit utilization is lower than the acceptable percentage. The rule of thumb: Never spend more than 30 percent of your credit limit.

2. Make payments more than once in a month

Instead of relying on a single monthly payment, try and pay your debt every two weeks. Besides building a good name for yourself, this approach lowers your credit utilization which ultimately enhances your credit score. Also, making early payments reduces the interest you would otherwise have to pay.

3. Maintain less credit card accounts

As a student, it makes no sense to have more than three credit card accounts. Resist the urge to open new department store charge accounts. Apart from the fact that you can only use the credit card in the retail store of issue, such cards tend to attract the highest interest rates compared to other credit cards.

4. Maintain old credit cards

As you resist the drive to open new credit accounts, exercise caution when considering to close old ones, since a bad move can work against your credit score. Many factors go into the calculation of your credit score, and this includes how long you have had a credit account. The ability to have in place the longest possible credit history is highly beneficial. It provides proof that you have the stamina to maintain credit accounts responsibly for a long time.

5. Accurate records

Do not downplay the importance of maintaining an accurate record of all your credit accounts. This entails keeping copies of all the documents associated with your credit accounts. From the application documents to the terms and conditions of the accounts, disbursement and disclosure papers and creditor correspondence, all these documents should be stored safely. You never know when you are going to need them.

6. Let your creditors know as soon as your address changes

A series of lost or missed bills can harm your credit report substantially. For this reason, remember to notify your creditors as soon as you change residences. A black mark on your credit report can remain for up to seven years, an element that lowers your credit score tremendously. Students should take advantage of the availability of computers to facilitate electronic billing and payment to avoid lost bills.

7. Prompt payments of bills

Always aspire to settle your credit card bills in a timely manner. Prompt payments help students, and other borrowers to build an excellent credit history. On the other hand, delayed or defaulted payments are extremely costly. The lender faces stiff penalties, besides having to deal with the pain of higher annual percentage rate. A single late payment is enough to leave a dent on your credit score.

8. Live below your means

Students should learn the value of living below their means. Stretch your dollars and accept that being thrifty does not hurt.

9. Always journal your credit purchases

Monitoring your charges keeps you on-the-know about the exact amount you must repay.

10. Get a copy of your credit report

Whether you are building up a credit report from scratch, or you are correcting a past mistake, it is good to evaluate your credit report every once in a while. It keeps you in check of your outstanding debt and also gives you the opportunity to identify and report any errors that needs correction.

Building a good credit score is no mean feat, especially for students. The process demands a lot of discipline, commitment, persistence, and one’s ability to overcome peer influence. In the end, you will look back, smile and give yourself a pat on the back for a job well done.