Many college students have no credit history because they’ve never borrowed money or had a credit card. If that describes you, there are several things you can do to begin building your credit.

Several credit options are designed to allow college students to establish good credit scores, and those scores can help in several ways. A strong credit score plays a significant role when applying for auto financing, mortgages, and credit cards.

Your credit score can also influence other aspects of life, such as securing rental agreements, obtaining a mobile phone, qualifying for lower insurance rates, and even passing certain employment background checks.

Here are some ideas for building a credit history:

Get pre-qualified for car financing

A little more than half of undergraduate college students have a car while attending school. Nearly one in four reported that they bought their vehicle on their own.

There are car dealerships that offer financing to buyers with no or bad credit history. Known as “subprime financing,” these opportunities can benefit buyers who may not otherwise be able to afford a car purchase.

If you’re interested, consider getting prequalified for financing. This step lets you secure funding before you visit a car dealership, so you know what your budget will need to look like. It's an effective way to take control of your finances as you shop. To explore this option online, fill out the form to get pre-qualified with Credit Acceptance.

Apply for a student credit card

Student credit cards are created for college students to help them establish a credit history. Many of these cards also offer benefits tailored to students, such as cash-back rewards for academic achievements.

Apply for a secured credit card

Secured credit cards, which are credit cards backed by a cash deposit in a bank account, are not meant to be used forever. The purpose is solely to help you establish enough credit to qualify for an unsecured credit card (one that doesn’t require a cash deposit) or other types of financing. As such, they are a useful tool.

Become an authorized user

Your parents can add you as an authorized user on their credit cards, which is yet another way you can establish credit. Being added allows you to use the card and benefit from the primary cardholder’s credit limit. However, you aren’t legally responsible for repaying the balance. Even if you don’t use the card, the account’s positive payment history and responsible usage can contribute to building your credit score.

Obtain a cosigner

A cosigner is brought on as an additional repayment source when you borrow money, enabling you to obtain terms you may not qualify for on your own. A parent cosigning auto financing for a son or daughter is a classic example.

A cosigner can be helpful in certain circumstances but should be approached carefully. If you obtain a cosigner, everyone should understand that the cosigner is responsible for the amount owed if you don’t make the payments.

Make payments on time

Although having a credit card is good for establishing a credit history, a maxed-out card doesn’t help. A time-tested way to establish credit is to obtain a credit card, maintain a reasonable balance, and make payments by the due date.

Another way is to use lenders who work with college students and others without a credit history. For example, if you’re in the market for a car, you can get pre-qualified for auto financing with Credit Acceptance.

Cited sources:

• Value Penguin www.valuepenguin.com/college-students-cars-survey