Student Tips: Smart Ways for Credit Building
For many young people, entering college years is most exciting as it is the time to celebrate independence and great opportunities! However, being financially independent can be a lot more difficult than it seems.
If you are a college student or just about to enter your freshman year, how can you prepare yourself for the challenges that await you? This article presents the importance of good credit history while in college and some practical tips on money matters for students.
Why Good Credit Is A Must
Why should you strive to establish good credit while you’re in your college years? Having good credit history will give you a huge advantage later on when you need to apply for loans, insurance, cell phone plans, and apartment rentals.
Keep in mind that lenders, insurers, merchants, landlords and even potential employers are all interested to see what your credit report reveals. In fact, an impressive credit history can just be the edge you need to win over your competitors when applying for a job.
Yes, college students are encouraged to start building credit history by getting a credit card for students and managing their accounts responsibly. Aside from using your credit card regularly, see to it that you will be able to submit your payments in a timely and consistent manner.
Practical Tips On Building Good Credit
Check out these practical money management tips that you can apply in your daily life:
Stick with one student credit card. One student credit card should be the only tool you need to build personal credit. Although it is easy to apply and get approved for student credit cards, managing multiple accounts can be tough. Furthermore, having too many cards in your wallet can increase the temptation to spend more.
Be frugal. Frugality means being a wise shopper and consumer. Before making a purchase, shop around first to see what different merchants offer. If you can’t afford to pay it with cash, you should make sure that you will be able to pay your credit card back on time. Seriously consider the difference between NEEDS and WANTS.
Save your money. Are you saving money from your monthly allowance? Open your own savings account and contribute to it on a monthly basis. It doesn’t matter how big or small you put in, what matters most is that you can contribute regularly. If you take on part time jobs during school breaks, save some of your earnings for your personal emergency fund and savings account.
Pay all your other bills on time. Whether it’s your student credit card or other creditors, make it a habit to pay your bills on time. You don’t have to wait until your due date arrives. If possible, post your payment earlier than schedule to avoid additional charges (interest rate, late penalty) and the risk of bad credit.
Manage your student loans wisely. Use your student loan to support your college education, not your personal whims. While in college, try to pay off at least the interest rate of your student loans so you can cut down your debt even before you graduate.
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