Credit can feel like a scary venture, especially when you’re still in college — but a long, positive credit history may open doors to more opportunities in school and into your life after college. We interviewed students in colleges across the country to see what they really know about credit. Their knowledge and understandable areas of confusion provides an interesting snapshot of where college students could do with a little more information about the importance of credit.

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What Is Credit History and Why Is It Important?

“Credit history is like a history of everything you have ever wanted to buy online but couldn’t.” — Malissa Carter, a senior at Chapman University studying creative production.

Not quite. Consumer.gov disagrees with Carter, and actually describes credit history as “a record of how you use money” — essentially, your record of bills and debts and whether you consistently pay them. Generally, three major companies — Equifax, Experian and TransUnion — use these records to create a report and score that represents only you. Establishing a credit history can feel overwhelming at first, but once you understand what you’re doing, this process can be simpler than you think.

“Having good credit is important because banks will judge you based on it! And It sucks to be judged!” said Charlotte Mildenburger, a sophomore at The Rhode Island School of Design.

It may help to think of credit as not about being judged, but about being practical. If you’re looking to do things like take out loans for school or just about anything that requires borrowing money (like renting an apartment or buying a car), having good credit will make it easier. Good credit may help lenders be more willing to lend you money and possibly at lower interest rates, because you’re seen as less of a risk.

Those with lower credit scores are seen as more of a financial risk as they may be less likely to repay their loans. Not only that, depending on the state you’re in, future bosses may be able to request a modified credit report as a way to judge whether you are right for the position you are applying for. Establishing a positive credit history might seem overwhelming, but you can do it.

How Do You Build Good Credit?

“To save money and have good spending habits, I try to cook at home as much as possible. I try to buy second-hand as much as possible— smart spending and saving can actually be fashionable.” — Melissa Carter

While that’s all a good idea, actually establishing a good credit history can be a little more complex than just practicing good spending habits. Having access to credit can help you buy books, clothes and a steady supply of study snacks, but you should always use it responsibly.

To ensure that you can pay for all your university needs, the U.S. Department of Education suggests deciding between what you want and what you need and sticking with it. Once you have a credit card account set up, the key is to treat the bill the same as any other: pay it on time and in full, every month. The Consumer Finance Protection Bureau also recommends keeping your spending below your credit limit.

What Would You Do if You Had Unlimited Access to Credit?

“If I never had to pay it off, I’d take my family out to expensive restaurants. I’d travel the world first class.” — Charlotte Mildenburger

While “unlimited credit” might sound great, the fact remains that every bill must be paid off. As Lillian Ritchie, a graduate student at New York University shares, she would do, “Nothing! I would still have to pay it off!”

That’s a good attitude to have, but that doesn’t mean you can’t use your credit wisely — after all, you don’t want to miss out on credit card benefits like rewards and cash back. One smart way to keep your spending in check is to not utilize all of your credit — meaning you only use a small percentage of your available credit. According to The Balance, utilizing less than 30 percent of your credit limit is best.

What Happens If You Do Max Out?

“Bad Things!” — Charlotte Mildenburger

She’s not wrong. It may seem trivial now, but a couple months of maxed-out credit cards has the potential to lead to years of debt. Credit cards charge interest on your remaining balance, and that number can grow if left unattended. Unexpected expenses come with college life, but by creating a workable budget and keeping an eye on your account, you will hopefully be able to keep your balance in check.

Important things to remember are to not utilize all of your credit, and to pay your bills on time. You can set up a reminder on your phone or sign up for your bank’s autopay system to ensure you don’t forget. There are tools to help, so definitely take advantage!

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Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.