If you are a college student, then it’s very likely that you have already received several pre-approved credit card offers. If you have not already received them it is very possible that you will soon so making a plan on how to establish your credit in college is crucial. It is important that you know how to deal with credit before you are confronted with several enticing offers from every credit card company and you end up like many of your friends who will leave school with their credit card debt equaling or even surpassing their student loans!
If all of this seems overwhelming and makes you want to back away from credit offers, think again. You have a great opportunity to make good credit history while in college by using credit wisely, responsibly and establishing a great credit history buying what you need! Overlooking the importance of credit in today’s world is not wise since how you use credit and credit cards will determine much about your financial future. It could even determine whether or not you get your first home or increasingly whether or not you land your first professional job!
For many people, especially those just starting out, building credit can be very difficult. You are denied for credit because you have no credit history and yet you cannot build a credit history without being approved for credit somewhere. College students are a lucky exemption to this though and often don’t tend to have such problems getting credit because they are seen as a lower risk than other types of borrowers and banks and other lenders are willing to take a chance on them. College students should view this as a golden opportunity to help them build a better financial future. Here are some vitally important information you should know about establishing credit in college-
• Be aware that your credit does not exist in a vacuum-When you have credit cards, creditors report your accounts and transaction history to all 3 credit bureaus, Transunion, Experian and Equifax. This information includes how many accounts you have, how much you have been approved for and most importantly, your payment history. All payments both on time and late will show up in your credit reports. Late payments on the reports of someone who is just starting out will drastically lower your new credit score. So make sure that you are paying at least the minimum payments on time. You can always pay more to your creditors when you get more money and bring that debt down!
• Consider how much you can pay-While you must make the minimum due, you should never stop paying more than this unless you are totally unable to pay any more. Keep in mind that if you pay less than the minimum due your interest rate will climb and your credit worthiness will then drop. If you are only paying the minimum amount due each month, even a modest amount of debt will take years for you to pay off.
• Get approved now-Keep in mind that you are more likely to get approved while in college than after you graduate! The higher interest rate you will be asked to pay is just part of being a newcomer to the world of adult finance, so if you’re responsible enough to pay off your balance as fast as you can, the interest rate you start out with will be irrelevant.
While no one is advocating going wild with credit ignoring the opportunity to establish credit while in college can cost you big in the years ahead. Responsible handling of your credit now can result in lower interest rates and fees ahead in your life and may pave the way to home ownership much earlier than you could have hoped for. This can all start with the responsible and wise use of credit and building your credit history while in college.