Impoverished College Students and the Various Ways to Build Good Credit ASAP

The process of growing up carries with it a great deal of excitement, but also stress. One of the main causes of concern for young people all across the country is that of their current financial status, given the tremendous amount of debt that many of them have accumulated after paying for a formal college education with borrowed cash.

If forthcoming loan qualification, auto insurance, cell phone plans and home ownership are to ever become a reality for Millennials, building strong credit now, rather than later, is a must.

Student Debt in the United States

Unfortunately, the state of student finances is as weak as it’s ever been. To this day, student debt is still on the rise for those seeking to obtain bachelors’ degrees at public and private universities in the United States. In 2013, seven out of every 10 seniors attended their respective graduation ceremonies with an average of $28,400 worth of debt owed to both federal and private lenders.

With such a situation in place, it’s no wonder that — as of the start of 2014 — the U.S. lays claim to over $1.1 trillion in cumulative outstanding student loan debt. On a personal, individual level — especially for young, up-and-coming professionals — building rapport with potential credit bureaus and mortgage companies by way of a secure credit score is a task worth addressing as soon as possible.

The Importance of Establishing Strong Credit

In today’s economy, nearly everything runs on credit, and the amount of trust which future lenders will place in you is almost entirely dependent on one thing: your three-digit credit score. While most credit scores fall between 600 and 750, anything over the 700 mark suggests proper credit management.

With good credit, mortgage obtainment with low interest rates makes purchasing a car, home or real estate a smooth process. With bad credit, however, borrowing money not only becomes all the more aggravating, but an extra costly affair.

If credit isn’t nurtured and solidified at a young age, the process quickly becomes a messy matter, making hopeful graduates wish that they’d never left the comfort of the common classroom.

1- Authorization Through Parents’ Account

Said Mike Sullivan, Director of Education for Take Charge America, a Phoenix-based nonprofit financial institution, via, “I always advise parents when the student is going off to college, unless you’re 100 percent sure they’re responsible, the first credit card that a student should have is yours.” As an authorized user on a parent’s account, your spending will be monitored at all times by the account’s rightful owner, while still helping you build credit. This is known as “piggybacking.”

Through piggybacking, family members — children, in this case — who’ve been authorized by an account’s governing party are able to build credit. Simply put, if a parent has good credit, then the child’s credit gets a friendly push in the right direction. If your parents are fortunate enough to have impeccable credit in difficult economic times, you stand to benefit from this method of credit enhancement.

2- Actual Credit Card Obtainment

For those who qualify for opening their own credit card, doing so isn’t such a bad idea. The connotative value surrounding the term “credit card” is a negative one, but when used responsibly, any credit card can be a fiscally beneficial stimulant. As is generally the case, if you can provide proof of income, it might be time to apply for a card in your own name.

After Congress and President Barack Obama signed off on the implementation of the Credit CARD Act of 2009, you may have noticed that issuers are no longer dying to place a credit card in the hands of each and every college student. Debit cards, nowadays, are the more popular option.

With an actual credit card tucked snugly inside your own wallet or purse, you and you alone are responsible for your own credit success or demise. Quickening the eminence of credit card custody isn’t a poor idea, yet — needless to say — mature spending can’t be emphasized enough.

3- Responsibility With Student Loans

This is a big one, particularly for the abundance of ongoing students or graduates who’ve yet to have fully paid off their student debt. The management of student loans is mightily facilitated and balances are kept low when a few practices are put into play: never purchase items of a noneducational nature with loan money; borrow only what you’ll need to get by; make minimum payments on time; consolidate, when appropriate, after graduation.

More than anything, student loan management — though never an ideal situation — is an incredible, hands-on learning experience which can foment useful economic habits, on a personal level.

Armed with good credit and peace of mind at a young age, there will be more than enough time to take your academic training and turn it into a money-making skill for what promises to be a bright future.

Lucas Miller is a young, penny-pinching finance writer from Provo, Utah. When not writing or running, he’s working tirelessly to perfect what he claims is the “World’s Greatest Pompadour.”

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