Feb 27, 2021 10:10 AM EST
Useful Financial Advice for Students to Consider
Building credit is a crucial phase of adulthood, one that should begin in college. Although many young people do not dwell on their finances, it is essential to think about the future. Most people are financially judged based on their credit scores. Some students have little to no credit history. Others have made poor mistakes and have seen their credit suffer. No matter the situation, it is essential for college students to learn some useful financial advice.
If your parents have a solid credit history, it is wise to have them add you as an authorized user to one of their accounts. This will be the building block of your credit history. As you establish credit, your parents can monitor your spending and keep you on the right path.
If possible, apply for one or two credit cards. Many financial institutions offer special options to college students. However, try to avoid applying for multiple cards at once. Responsibly using one card is enough to build your credit into the short-term. Make sure to choose a card with no annual fees and the lowest interest rate possible.
One of the best ways to improve your credit rating in college is to understand credit utilization. This is the amount of credit that you use versus the amount of credit that you have. To boost your credit score, charge amounts that are easy to pay off at the end of each month. Never miss a payment or carry large balances. These circumstances will lower your score. To avoid late fees, contact your credit card company and ask if it is possible to have at least the minimum payment withdrawn from your bank account on your due date.
Put Bills in Your Name
If you currently live in off-campus housing, you likely have monthly bills. It's a smart decision to put your utilities, rent, or mobile bill in your name. As you pay each month, you gain a positive credit history. Although certain credit reporters don't count these payments toward your score, it is still a wise idea. It's an excellent way to prove to lenders that you are dependable.
Wisely Manage Your Student Loans
Many students face large amounts of debt after graduation. Even though the terms of most student loans are lengthy, consider repaying before the grace period expires. Although you are not required to repay your debt for six months after graduation, making early payments will lower your due interest. If you can juggle small payments in college, it is wise to consider covering the interest each month. It's also imperative for students to avoid fraudulent lenders intent on tricking borrowers into paying more than is required.
Mix Things Up
Your credit history should contain a wide variety of items. To show lenders that you are responsible, you should have a blend of credit cards and loans. If you maintain a positive payment history, your score will reflect this in a positive way.
College students need to consider their finances as soon as possible. Building a solid credit score takes time, but it is crucial. Following the above tips should help you establish a good credit history while you are in school. Getting an early start will have a positive impact on your future financial circumstances. By using these tips, you should be able to improve your score and enjoy good credit beyond your college years.
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