<p>Take the case of a family that is willing and able to pay their student's EFC, and the student has the opportunity to borrow most or all of that from a bank as a private student loan with the parents co-signing.</p>
<p>The idea would be for the student to take out the loan, make a few monthly payments, and the parents would pay the loan in full a few months later.</p>
<p>Would this help the student establish a good credit rating?</p>
<p>Thanks in advance.</p>
<p>Don’t take my word as gospel, but it is my impression that it is the regular payments that benefit the credit rating the most, not paying it off.
My daughter borrowed money to buy a computer for school, and then had automatic deductions for payments.
That also often reduces the interest rate after a certain # of on time payments.</p>
<p>I believe EK4 is right. Showing you can manage regular payments.</p>
<p>Makes sense. Thanks</p>
<p>Our S did NOT have any loans but had a co-credit card with me that we paid off together regularly (never had any outstanding balance). As soon as he got his 1st full-time job, he had a sky-high credit rating and NO debt.</p>
<p>Personally, I see no advantage to taking on any debt that isn’t essential. It was never necessary for me, our kids or H so far in our lives and we all have excellent credit. I have also a different joint CC with D that has helped boost her credit rating, I believe.</p>
<p>Himom is correct, you should go the cc route. My son applied for a cc his freshman year, and I keep the card. I randomly use it for small purchases, and I pay it off. It is essential to show continuous activity for a good credit score. By the time he graduates he should have a great score.</p>
<p>curious, partyof5, why you keep/use son’s card?
You may be helping him establish good credit score, but you’re the one establishing it, not him. </p>
<p>We went another route. My D got a credit card through her bank that was tied to a savings account. (her limit is tied to the savings account). Eventually, they will raise her limit above that (I think at graduation?)</p>
<p>I emphasized to her that she MUST pay it off each month, and for the first semester or so, I did remind her during stressful periods (midterm, etc) not to forget to pay. She’s a junior now. She uses it only to buy gas, which is something she does maybe 1x a month, and pays it off monthly with no reminders from me.</p>
<p>She is learning about paying bills and managing money by doing this.</p>
<p>I too suggest the CC route. I got a co-signed one in high school, my first independent one in college, and now I have almost perfect score with a 6-year long credit history. It allowed me to finance my own car at 20 and I know it will be a major boost when I go apartment hunting next year for grad school. </p>
<p>I <3 my credit card because it gives cash back. I put everything on it. Nice little perk for things I’m going to buy anyway.</p>
<p>Just a thought: would using the colleges billing system to buy books, food on campus outside the meal plan, spirit wear at the school store, etc. do anything to build credit? The account is in the student’s name, so if there is ongoing usage (several times a month) would that act the same way as cc purchases on establishing credit? I am not talking about the tuition bill here.</p>
<p>Mere, I wouldn’t think so, but I could be wrong.</p>
<p>I definitely don’t think it would be treated like a credit card. Probably more like a debit card which really does nothing for credit score.</p>
<p>I’m wondering because DD has a dc and we are not a family that uses debt unnecessarily. She really isn’t interested in a cc as the dc has worked so well for her. She has to write e-checks to pay off the “UBill” account each month, which is the same process for a cc (on-line banking). Seems like it should, although it probably doesn’t.</p>
<p>[Does</a> My Debit Card Affect My Credit? | eHow.com](<a href=“http://www.ehow.com/info_7935854_debit-card-affect-credit.html]Does”>http://www.ehow.com/info_7935854_debit-card-affect-credit.html)</p>
<p>Thanks, Erin’s Dad!</p>