Tips for Students
It can be hard starting out and not knowing exactly what you need to do to have a good credit file. Terms like credit report, credit score, APR, and finance charges can seem foreign and hard to understand. It can seem as if no one really knows how things exactly work in the credit world. Here are a few tips to start you out the right way:
- You can’t start legally obtaining credit (and therefore obtaining a credit report) until you are over 18.
- Expect to find yourself with a mountain of credit offers. Once you get ‘on the grid’ many companies will send solicitation and credit card offer continually. Try to practice restraint and be choosy about the offers you want to accept.
- Expect to get denied credit every once and a while. Starting out can be frustrating as many lenders don’t like to lend to people without a proven track record.
- Make sure you have an open checking account. This is the foundation by which all financial transactions can occur.
- Start off by obtaining at least one good, starter credit card. This could be a student credit card, a secured credit card, or an offer you’ve received in the mail and carefully reviewed for all fees and terms. Credit cards paid in a timely manner are the best credit references you can get on your credit file.
- You can’t borrow off of any of your parents’ account pay histories, but you can ask them to help you get an auto or other small loan at a bank or credit union. They will have to co-sign for you (which means they are held equally responsible for the debt) and the payment history of the account will show up on both of your credit files.
- All of your bills must be paid on time. ALWAYS!
- Credit, by definition, is the arrangement that you have with a creditor or lender to repay a debt or obligation. Notice the word REPAY! Remember, credit is not free money, and it ALWAYS comes with a cost.
- Applying for credit can take points off of your credit score, so don’t try and apply for every offer you can get just for the free pizzas or t-shirts.
- Remember that responsibly using your credit cards (one very small purchase every few months) will pay off greatly when you need to get your own home, car, or consumer goods.
- Be careful when financing for college! Student loans can become a nightmare if it doesn’t work out or if you have a hard time finding a job after graduation. Make informed decisions when planning for your future.
- There are no grounds for experimentation here. There’s a right way and a wrong way to go about using credit; the rules have already been set. The choices you make early in your credit history will haunt you or bless you for years!
Posted: January 22nd, 2009 under Advice, Credit Education.
Tags: credit cards, credit reports, credit scores, student
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