“Building Credit” — What It Means, Why It Matters, & How To Get Started

Whether or not you know it yet, your plans for the future probably include renting an apartment, buying a car, landing your dream job, or maybe even owning a house one day. As a college student just trying to get through the semester, it’s normal to put these larger life milestones on the back burner and worry about them later — but you can actually start working toward these “adulting” goals by beginning to build your credit today.

Making money moves as a college student can seem intimidating, especially if you’ve never had a credit card of your own. But it’s also the perfect time to dip your toes into the world of financial responsibility: Your credit card eligibility begins the moment you turn 18, and if you use it wisely, it can be a critical tool when it comes to establishing your credit history.

Think you’re ready for a card, but unsure where to start? We partnered with Capital One to help you navigate the waters when it comes to building credit — what it means, why it matters, and how to begin today.

What Is Credit, And Why Does It Matter?

Today’s economy pretty much runs on credit. Any time you want to make a big purchase, like financing your first car or even buying your first condo, you may want a lender to extend you a line of credit. And lenders give the best rates, or charge the least amount of interest, to those with good credit scores — a three-digit computed number, like your FICO or VantageScore, that essentially tells lenders how likely you are to pay a loan back on time.

Good credit can also make you a more attractive applicant for an apartment, job, or even pet parent, as it represents financial responsibility. Comparatively, individuals with an inconsistent credit history may be seen as more of a risk due to things like their ability to make payments on time.

What Does It Mean To “Build Credit”?

“Credit” alone reflects your reputation for repaying your debts, based on how much you borrow and the timeliness of repaying borrowed funds. When you use credit responsibly, you “build credit,” i.e., create a history of borrowing and repaying that shows credit lenders you have a reliable borrowing history over time.

Credit is meant to be built over time, and the length of your credit history accounts for about 15% of your FICO credit score. Think about your credit history as your financial resume: Employers would rather see a series of consistent, reliable jobs rather than some good work here and there with large, unexplained gaps in between, or a single prior work experience. Similarly, a longer history of responsible credit use looks better to lenders than a short history or no history at all. So the sooner you start, the more time you have to build a healthy financial resume.

Get Pre-Approved For A Credit Card

One of the simplest ways to establish and build credit is by opening a credit card and using it responsibly. Once you have a credit card, your credit history is reported to the major credit bureaus on a regular basis, so you’ll have the ability to work on your credit with every swipe.

Capital One offers a Pre-Approval Tool for students that takes less than a minute to complete, and because it involves what’s known as a “soft pull” on your credit history, it won’t impact your credit score. With a few pieces of basic information, you’ll learn which Capital One student cards you’re pre-approved for. While pre-approval doesn’t guarantee you’ll be approved for a certain credit card, the process gives you a good idea of whether or not you’ll be approved if you formally apply so you can do so with confidence.

Choose The Right Card For You

After you get pre-approved for a credit card and explore your options, you can apply for a card that meets your needs and offers you useful benefits and rewards. Capital One has two amazing options for college students. SavorOne for Students has awesome rewards on everyday purchases, including 3% cashback on dining, entertainment, popular streaming services, and at grocery stores (excluding superstores like Target® and Walmart®). Plus, new cardmembers who are approved will earn 1% on cash back on all other purchases and a $50 cash bonus when they spend $100 in the first three months from account opening.

Quicksilver for Students is another great option for undergrads, offering 1.5% cash back on every purchase. Featuring many of the same perks as SavorOne Student, both cards have 10% cash back on purchases on Uber and Uber Eats, plus a complimentary statement credit for your Uber One membership through Nov. 14, 2024.

They also offer 24/7 access through the mobile app, security alerts, no foreign transaction fees, and $0 annual fee (see pricing and terms for SavorOne Student and Quicksilver Student). With $0 fraud liability for unauthorized use, you’ll never be held responsible for unauthorized charges in the unfortunate event of a stolen card (subject to verification).*

While Capital One may use available credit scores when vetting potential applicants, you don’t need a credit score to actually apply, making SavorOne Student and Quicksilver Student ideal cards for first-timers.

Monitor Your Credit Score

Once you open your own credit card, it’s important to practice responsible spending and repayment habits. This includes only spending within your means and paying off your balance in full every month, if possible. If you can’t pay the full balance, it’s a good idea to pay off as much as you can or at least the minimum payment amount.

Regularly checking your credit score allows you to monitor progress and make sure you’re on the right track. CreditWise from Capital One is a 100% free tool that allows you to easily monitor your VantageScore® 3.0 credit score from your phone, so you’ll be able to track your progress.** Other CreditWise features include access to your Transunion credit report anytime, credit score updates as frequently as daily, alerts for meaningful report changes, and dark web monitoring.***

Ready to start your credit-building journey? Head over to the Pre-Approval Tool and find out if you’re pre-approved for SavorOne Student or Quicksilver Student today.

*$0 fraud liability claims are subject to investigation and verification.

**The CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many scoring models. The CreditWise score is a good measure of your overall credit health, but it is not likely to be the same score used by creditors. In order to enroll in CreditWise, you need to be a U.S. resident, at least 18, and with a valid social security number that can be matched to a credit profile from the TransUnion credit bureau.

***Alerts are based on changes to your TransUnion and Experian® credit reports and information CreditWise finds on the dark web. Some monitoring and alerts may not be available if your enrollment information does not match the information at one or more consumer reporting agencies.