Make sure your student knows the building blocks of credit, including the factors used to determine credit scores. While factors such as new credit, length of credit history, and credit mix will play a role in their credit later, the two most important issues for loan applicants to focus on include payment history and credit utilization. of the loan.

In general, college students and everyone else can score well in these categories by making all bill payments on time and keeping debt levels low. How low?

Most experts recommend keeping your credit utilization below 30% at most and below 10% for the best possible results. That means trying to owe less than $300 for every $1,000 in available credit limits at most, but preferably less than $100 for every $1,000 in credit limits.

Add your child as an authorized user

One step you can take personally to help a child build credit is to add them to your credit card account as an authorized user. This means they'll get a credit card in their name and have access to your spending limit, but you're legally responsible for any charges they make. Of course, this move works best when you have excellent credit and a strong history of on-time payments and plan to continue using the loan responsibly.

While this step can be risky if you're worried your college student will use their card to overspend, you don't actually need to give them the physical authorized user's credit card.

In fact, they can get credit for your on-time payments whether they have access to a card or not. If you decide to give them their credit card, you can do so with the agreement that they can only use it for emergency expenses.

Your child can build credit faster if they apply for a credit card and get approved for one themselves, but this can be difficult for students with no credit history. That said, secured credit cards require a refundable cash deposit since collateral is very easy to get approved for.

While secured credit cards are a good option for students with little or no credit to start their journey to good credit, there are also credit cards designed specifically for college students. Student credit cards are unsecured cards, meaning they don't require a cash deposit as collateral, but charge interest on any purchases that aren't paid in full each month.

Many student credit cards offer spending rewards without also requiring an annual fee, though these cards tend to come with a high APR. The key to getting the most out of a student credit card is for dependents to only use it for purchases they can afford and pay off the balance in full each billing cycle. After all, high interest rates don't matter much when you never carry a balance from month to month.

While secured cards and student credit cards help young people build credit with every bill payment they make, other payments they're making can help, too.

In fact, using an app like Experian Boost can help them get credit for utility bills they're paying, subscriptions they're paying, and even rent payments they're making. This app is also free to use and you only need to set up most bill payments in the app once to report them to the credit bureaus.

The Fair Isaac Corporation (FICO) also notes that students can begin building credit with their student loans while in school, even if they are not officially required to make payments until six months after graduation with federal student loans.

College students don't have to wait until they're done with school to start building credit for the future, and it makes sense to start building positive credit habits early regardless. Tools like a credit card can help students on their way, whether they choose a secured credit card or a student card. Other steps like using credit building applications can help as well, and with little effort on the part of the student or you.

Either way, the best time to start building credit was a few years ago, and the second best time is now. You can give your student a leg up on the future by helping them build credit so it's there when they need it.