July 5th, 2014 8:24 PM by Jackie A. Graves, President
Be aware that there's a downside to trying to build your credit
score while you're in college. Your limited income and increased pressure to
spend may lead to big credit problems including debt and damaged credit. If you
decide to get a credit card while you're still in college understand the risks
a good credit score isn't hard, if you handle credit wisely: borrow only what you can afford to pay and pay it back on time. It also means
avoiding critical mistakes that can damage your credit for years to come.
Get a job.
Before you consider a credit card, you should have a steady income from a work
study, part-time job, or even a full-time job. Without a steady income of your
own, you probably won’tqualify for a credit card – at least not without a cosigner. You
can’t realistically expect to pay back a credit card balance if you don’t have
a regular income.
allowance from your parents doesn’t count as income as far as credit cards are
concerned. And you can’t necessarily depend on your parents to repay your
credit card balance. What if your parents’ financial situation changes and they
can no longer afford to pay your credit card payments? You’ll have to start
paying on your own or deal with the effects of missed payments.
credit card and use it wisely. Telling college students to get a credit card
sounds like pretty bad advice, especially considering CNN Money’s report that 2013’s college graduates left school
with about $3,000 in credit card debt. But it’s impossible to build a good
credit score without a positive history of borrowing on your credit report. It
is, however, possible to have a credit card, use it, and not accumulate
thousands of dollars in debt. Using your credit card wisely and responsibly is the key to building a good credit
score and staying out of debt.
Resist the temptation to live
above your means. Often college life comes with huge pressure to keep up
appearances. You may feel tempted to use your credit card to buy new clothes or
shoes, buy dinner for your friends, or to fund weekly bar crawls. Your credit
card is not a way to buy things you couldn’t otherwise afford. If you abuse
your credit card by running up a big balance and not paying it back, you’ll
ruin your credit score before you ever get a chance to benefit from it.
have a job, you should have a weekly or monthly budget to plan out how you’re going to spend
your income, if you don't already have one. Remember that your monthly credit
card payment is an expense on your budget, not a source of income.
Don’t max out your credit
card. The temptation to splurge with your credit card, especially
when you have so few other responsibilities, is almost too great to resist. But
you have to resist it. If you don’t feel like you can be disciplined enough to
spend just a little bit, don’t get a credit card just yet.
When you are ready for the financial responsibility of credit,
never charge more than 30% of your credit limit. That rule of thumb will keep
you from running up a balance you can’t afford to repay.
Don’t open up too many
accounts. One credit card is enough to start with. Multiple credit cards
are difficult to manage, especially when your primary concern should be your
college courses. Plus, the more credit cards you have, the easier it is to get
into debt. Spend a few years getting used to having a single credit card and
wait until you’re established after graduation to consider opening an
additional credit card.
Don’t borrow more than you
can afford to repay. Credit cards aren’t the only debt
products that affect your credit score. Loans, like student loans and car
loans, can also affect your credit. A rental lease, which may or may not be
reported to the credit bureaus, can also be considered a type of loan.
Before you take on obligations that require monthly payments,
consider your ability to repay. You may be able to rely on your parents to pay
for some of your expenses, but remember that their financial situation can
change without notice. You may be able to work to cover some of your expenses,
but consider how many hours you have to work to cover your expenses. Don’t
forget that the more you work, the less time you have for school work.
Make your payments on time. The
biggest part of your credit score is based on how often you make your payments
on time. Aim for 100% on time payments on all your bills. Once you’re 30 days
late on your debt obligations, the credit
notified and the late payment goes on your credit report. The more late payments
you have, the more your credit score is hurt.
payments, like utilities and cell phone bills, aren’t routinely reported to the
credit bureaus. But, if you fall far behind on these and they’re sent to a collection agency, the collection account
could go on your credit report. A collection is one of the worst things for
your credit report. Avoid them at all costs.
Be careful who you choose as
roommates. Your roommate doesn’t have a direct impact on your
credit score, but your roommate’s payment habits can impact you. For example,
if your roommate doesn’t pay their share of bills that are in your name, your
credit score could be hurt. Or, if your roommate skips out on bills, it could
strain your finances making it harder to pay all your bills.
When you move out, turn off all utilities in your name and have
your name removed from the lease. Your former roommate may not be as diligent
about paying bills once you’re gone and any unpaid bills will come back to
Don’t skip the rent or break
your lease. More apartment complexes are using services that report to the
credit bureaus. That means your rental payments could impact your credit score.
Timely payments will help your score and late payments could hurt you.
Breaking a lease or leaving behind an unpaid balance will impact
your credit and could make it harder to rent a home or buy a house once you
It’s Ok to Wait
There’s no rule that says you must have a good credit score when
you graduate college. Some things may be easier if you already have good
credit, but trying to establish good credit while earning a degree and figuring
out young adult life is tough. It’s much better to start out with no credit at
all, than to start with a bad credit score that was ruined because you started
Four Ways to Get Your First Credit Card
What to Expect With Your First Credit Card
Understand Your Billing Statement
How to Prepare for a Credit Card
10 Credit Card Terms to Know
Tips for Starting Out With Credit
7 Ways to Build Good Credit
How to Rebuild Bad Credit - Four Steps to Better Credit
7 Ways to Maintain a Good Credit Score
9 Things That Boost Your Credit Score
7 Times You Shouldn't Use Your Credit Card
Latoya Irby – To view the original article click here