How do I build up my credit history and score?

Length of Your Credit History – 15% of your credit score*

A longer credit history can contribute to a higher credit score – particularly if that credit history demonstrates using credit responsibly. While having a short credit history does not automatically result in a low credit score, if you’re striving for a perfect score, having a well-established credit history will be necessary (SubscriberWise).

New Credit/Inquiries – 10% of your credit score*

An inquiry is when a lender obtains your credit report from a credit bureau after you request credit from them. Every time you apply for a new credit card, mortgage, student loan, or another form of credit, a credit inquiry is generated.

• Hard inquiries are the ones that can affect scores. They indicate if an individual is actively trying to get a credit card, student loan, etc.
• Soft inquiries do not affect your credit score. Examples of soft credit inquiries include employer-generated or insurance company-generated inquiries, pre-approved inquiries, account reviews by lenders with whom you already have credit, and whenever you check your own score.

College Ave Student Loans offers a pre-qualification tool where you can see if your credit is likely to qualify prior to applying. This is an example of a soft inquiry that does not affect your credit score.

Types of Credit – 10% of your credit score*

Car loans, mortgages, credit cards, and student loans are all seen as different types of credit in the eyes of the credit reporting bureaus. Having a good mix of financial responsibilities and handling them in a trustworthy manner could improve your credit score.

* See Fico and FicoScore/FAQ for more information about this breakdown and other aspects of your credit score calculation and usage.

It takes time to build your credit history. If you recently checked your credit score and found that it is low (or even nonexistent), you’re not alone. High school and college students typically have a limited credit history because they simply haven’t needed or had the ability to formally borrow from an established lender before. If you’ve never had a car loan, mortgage, credit card, or another form of credit, you won’t yet have a credit history and – as a result – a credit score.

There are a few ways that you can establish a credit history and build up your score. One way is to have a parent or legal guardian with good credit cosign a loan or credit account with you. Even if you don’t use the account, you’ll start building credit history as payments are made on time. This is called “piggybacking,” and it should ideally be done using a family member or spouse’s credit account.

How can I get a private student loan with little or no credit history?

If you have a low credit score – or no credit score at all – it is unlikely that you will qualify for a private student loan on your own, but that doesn’t mean you can’t get one. It means you’ll probably need to find a cosigner.

A cosigner is an individual – often a parent or legal guardian – who will sign the loan with you and take equal responsibility for it. Since your cosigner’s credit score can affect your interest rate, it’s wise to approach someone with a solid credit history.

Information about your loan will appear on both your and your cosigner’s credit reports, so keep in mind that any missed payments on your end could directly affect your cosigner’s good credit. Learn more about private student loan cosigners.