Many of the thing’s college students aspire to achieve upon graduation — a solid job, an apartment of their own or a new car — require a good credit history. Building positive credit responsibly while you’re still in school is easier than you think and can yield rewards for a lifetime.
Learn About Your Credit Score and How to Check It
Learning the basics of credit, such as what determines your credit score, how to manage and improve credit, how to dispute inaccurate information on your credit report, and ways to use credit responsibly can make a world of difference in building a solid financial foundation. There are a multitude of resources to learn just how this is done.
Learn How to Budget
Learning how to make a budget and stick to it is one of the most critical credit lessons. So much of your credit score depends on your ability to pay your bills and debts on time, every time — and that requires good budget management. If you have trouble following or creating a budget, try tracking your income against your spending. Many banks also offer free monthly snapshots of your spending habits by category, so you can identify where to cut back or make adjustments to your budget. And you can always reach out to professionals like our team here at Worthwhile Wealth Council!
Try AutoPay & Bill Reminders
When you’re juggling multiple responsibilities, it can be difficult to stay on track with every bill and payment. That’s why opting into AutoPay is such an important tool for avoiding late payments that can hurt your credit score. Bill Reminders help support your AutoPay tool by reminding you ahead of time that you have a bill coming due, enabling you to check your account and ensure you have enough funds to cover the bill and avoid an overdraft. These two tools, when used together, can keep your monthly payments and credit on track, and avoid simple oversights that can ding your credit.
Choose a Card That Can Help Build Your Credit Habits
For many young adults, college is the first time they have access to credit, usually in the form of a credit card. Choosing a card with no annual fee, that also offers flexible rewards and strong security features can be a good way to help build credit while you’re still in school. Also, parents can add your child as an authorized user on their cards and help build their credit that way!
Important Tip: Do not get a credit card unless you already have a good understanding of budgeting and how credit cards work.
Plan for Student Loan Payments
If you don’t not have college savings or a scholarship funding college planning for student loan re-payment before you graduate is a savvy way of ensuring you get the boost that on-time loan payments provide to your credit. Speak with your financial aid department now, so you understand your debt repayment options – such as federal loan repayment plans based on your income (that way, you never need to pay more than 10% of your discretionary income toward debt, should you be unable to make standard payment amounts). Identify career options that meet your budget needs and life goals, and find ways to help reduce your reliance on student loans, so you borrow less now and repay less in the years to come.
Your student years should be a time to grow, learn, and enjoy the possibilities life has to offer. By learning how to manage your credit properly now, you’ll be a step ahead and have even more confidence and freedom post-graduation.
This commentary was originally posted by Janet Alvarez
**Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.