College students already have enough to deal with without worrying about their credit scores. From jobs and classes to their futures and living away from home for the first time, credit cards and credit scores might be the farthest thing from a young student’s mind. That being said, unwary college students are often targeted by malicious credit card companies that seek to take advantage of them and their lack of experience and knowledge when it comes to properly using credit. Because a credit score is something that takes time to build, it’s often a good idea to start establishing the proper foundation as early as possible.
One of the first things students should understand is that they’re credit score impacts several different facets of life. For instance, some employers like to take a peek at an applicant’s credit score, which can help determine how responsible that person is. If a student has to take out loans to earn an education, his or her credit score will have a huge part to play in the interest rate she or he receives. When looking for an apartment while upgrading from dorm life, landlords often look at a potential tenant’s credit score much for the same reason as employers: to better determine overall responsibility. After all, if a person can’t be trusted to take good care of her or his credit, how can that individual be trusted to take care of a company or apartment?
Building Credit One Step at a Time
It’s also best that college students maintain a slow but steady pace when it comes to establishing their credit. For instance, simply opening a credit card account goes a long way in boosting a credit score and report, mainly because how long a person has had credit plays a big part in her or his overall score. Buying a full tank of gas or a meal at the beginning of the month and paying off the total before the end of the month is a solid strategy to avoid misusing a card.
There are also starter credit cards designed specifically for college students and young consumers looking to cut their baby credit teeth and learn how to use credit cards properly. There are cards that give holders a refund if a lower price is found on an object they purchased, and there are also cards made specifically for students who study abroad and don’t want to deal with an international transaction fee. Such cards are a good way for students to gain an understanding of the many different types of credit cards and credit card rewards available to them, which is better than gaining an education in learning how to go into debt.
Ask Mom, Dad and Responsible Adults
Rather than making their own mistakes and learning credit lessons the hard way, college students are better off learning from adults who have more experience using credit cards. Mom and dad make for an invaluable source on how to use credit cards and build a credit score. Students can also ask their relatives as well as other responsible adults about the ins and outs of credit scores. A little independent research can also uncover a wealth of information from consumers who weren’t so careful with their credit cards. Lessons from both sides offer a wide perspective on what to do, what not to do and which spending and saving habits are the most beneficial. Such information can help students avoid making seemingly simple and long-lasting mistakes that can leave them with a credit quagmire that takes several years and a lot of money to pull themselves out of.
Remember the Fundamentals
It’s undoubtedly true one’s credit score has a huge part to play in everyday life, but that doesn’t mean it’s necessary to agonize over a credit score and report for several hours a day. Students should learn the basics of maintaining their credit, such as making payments on time, keeping credit utilization low (preferably under 20 percent) and making more than the minimum monthly payment to avoid wasting money on interest.
While it might sound like a waste of time, it’s also a good idea for students to understand what’s involved in fixing credit. Such knowledge provides further insight into the nuances of how credit works and how to make the most of it without making unnecessary and avoidable mistakes. For instance, one of the cornerstones of credit repair is removing inaccuracies from one’s credit report. This lets students know they should request a free copy of their credit report at least once a year to ensure everything on it is accurate and current.
Avoiding hard credit inquiries is another valuable tip for avoiding credit score hits and maintaining a solid credit score. Hard credit inquiries are often necessary when seeking a car loan or mortgage, applying for new credit cards and even renting household appliances. While some inquiries are worth it, others aren’t, such as when you know you more than likely won’t be approved for financing or a loan because your credit score is already poor.
Live With Responsible Roommates
College students should also understand the people they choose to live with can also impact their credit. When two or more people have their names on the lease, they all run the risk of their credit scores being damaged if a roommate fails to pay her or his rent on time. Not only do late payments result in unnecessary fees, such negligence can also be reported to a credit agency. It’s always best to only live with trustworthy and responsible roommates.
On a related note, young credit holders should use caution when thinking about being someone’s cosigner, no matter how much they might want to help a friend or family member out. Should that person miss a payment, the cosigner’s credit can be negatively impacted all through no fault of her or his own.
Maintaining and improving a credit score is something that takes time and good habits. College students should get an early start to establish proper practices that are sure to serve them and their credit well throughout the rest of their lives.