How to build credit as a pre-law student

If you’re thinking about going to law school after undergrad, you’re probably busy taking prerequisites, researching law schools and studying for the LSAT. With all that on your mind, you might not be thinking about the debt that you’ll incur or how you’ll pay for everyday expenses.

The truth is, the sooner you start planning for the financial side of law school, the better.  Law school is expensive. And unless you can pay tuition out-of-pocket, or you have a scholarship, you’ll likely need to take out a substantial amount of loans. In order to do this, or rent an apartment successfully, you’ll need a good credit history.

Why is it important to build credit?

Realistically, you’re likely looking at over $100,000 in total loans for law school. On top of that, you need to pay for textbooks, pay rent and when you can, eat. 

Between government loans and private loans, there are a lot of options out there, but you’ll need to do some work in advance to identify which ones are available to you. Step one: build your credit.

Credit is money that you borrow to purchase goods and services. When you get credit from a lender, you agree to repay the amount that you borrowed by a certain date. If you don’t, interest builds and you end up owing more money than you planned for. The more you use credit, the more credit history you build. Whether or not your credit history is good depends on your habits. 

But, what is good credit? Your credit reports are reviewed by prospective lenders to determine whether or not lending you money is financially risky for them. For someone with a strong credit history who pays their bills on time, there’s less risk for the lender. But someone with a poor credit history is seen as less likely to repay their debts on time, which creates financial risk for the lender.

So, if you have a bad credit history or no credit history at all, obtaining the loans you need for law school will be difficult. Fortunately, you can start building credit in college as early as 18. So when the time comes to prepare for law school or rent an apartment, you’ll have no trouble securing the funds that you need.

How to build credit as a student

If you’re intimidated by the thought of needing a good credit score to realize your law school dreams, don’t be. Even if you have no credit history to date, there are plenty of ways you can build credit.

Building your credit as a student doesn’t have to be a full-time job. Once you choose a method, you can create a plan that works for your situation.

These five methods are great options for building credit while in school.

1. Get a credit card

Arguably, the simplest way to build credit is to open a credit card. Since you don’t have a credit history, you can start with a limited credit option, such as a student credit card or secured card. Create a budget to determine how much money you will spend in each month and how much of that you can afford to put on your card.

It’s important that you allocate a certain amount of money each month to pay off your card. If you miss your monthly due date, you’ll incur interest that can later hurt your credit.

As an undergrad, you have fewer day-to-day expenses than someone who is out of school. You likely have your living expenses covered, and you might use a meal plan, but you still have other smaller expenses that you can pay for with your card.

2. Get a credit-builder Loan

A credit-builder loan is designed to help you build credit. Even with a poor credit history or no credit history, you can use this method to build your credit affordably.

This type of loan holds your borrowed money in a bank account, and you make monthly payments on the loan. Once you’ve paid it off, then you receive the money. Your payment history is what builds your credit. It’s a great option for a student who has extra money to put away each month.

3. Use a co-signer

You can have a parent become a co-signer on your credit card or loan. This is risky for the co-signer, because they are obligated to make payments if you don’t. But it’s a nice method of support until you can get the ball rolling on your own.

4. Become an authorized-user on someone else’s credit card

Another way to build your credit is to have someone else add you as an authorized user on their credit card account. This means you can make purchases on someone else’s card under your name. It’s not the fastest way to build credit, but it can be effective while you’re in school.

If your parents give you money for food or other expenses each month, you may want to ask them to consider this option. As long as they stay on top of the payments, you’ll have no problem building your credit this way.

5. Use your bill payment history

If you’re already paying for your rent, phone bill or any other recurring expenses, you might be able to use that to boost your credit score. Services are available that add these payments to your credit report.

Although not every report will take this into account, it is well worth considering.

Scholarships and other options

Of course, before you take out a loan or consider paying for school with your savings, you’ll want to explore all of the “free money” options available to you. 

In addition to applying for scholarships and other financial aid through your school of choice, look for money from outside sources as well. Plenty of aid is available to applicants who are proactive and meet the criteria. 

In a nutshell

Knowing your options for building credit as a pre-law student is important. After applying for scholarships, loans are the best way to cover your tuition. By choosing one of these simple methods to build your credit, you will be well on your way to securing the loans you need.

The preparations you make now will mean a world of difference when you’re ready to start law school.

Morgan Casper

Morgan Casper is a personal finance writer. She’s also a law student and freelance photographer. Read more of her writing here: https://morganlcasper.com