Going to college is one of the first true tests of adulthood. Students often strike out on their own — leaving the nest for new territory. But along with the new adventure comes a wealth of new responsibility. While college co-eds may be learning macroeconomics and world history, seldom do they get an education in one of the most important subjects: personal finance. If you’re not careful, simple credit mistakes may mean a rough ride for your future finances.
Follow these simple rules and credit tips for college students and your credit will be in top shape come graduation.
1. Pay your bills on time — really.
The cardinal rule of credit is simple: Pay your bills and pay them on time. It may seem trivial—who cares if your bill is a few days late?—but it makes a big difference in your credit in the long run. Your payment history contributes to 35 percent of your credit score, and on time payments matter. Set up alerts and use online payments to help you stay current when it comes to your bills. Remember, any payment more than 30 days late will likely be reported to the credit bureaus as a delinquency. These types of delinquencies add up over time and can knock down your credit score substantially. A lower credit score means that when it comes time for you to buy a home, car, or get a credit card, you’ll end up paying much more in interest rates. To ensure you always pay your bills on time, take advantage of Manilla.com’s automatic text and email bill pay reminders.
2. Practice discipline with plastic.
Credit cards can be a smart way to build up a healthy, well-aged credit history. But those who are using credit cards for the first time may thing this gives them license to spend beyond their means. It’s a myth that you need to carry large amounts of debt to achieve excellent credit. Whether during college or years later, co-eds need to know that if they don’t have money to buy something with cash, they shouldn’t make the purchase. Don’t use your credit card to fund that rad spring break trip. Small monthly charges to your credit card can be just as effective as large charges when it comes to building your credit.
3. Monitor your credit score and report.
One in four consumers has an error on one of their credit reports. Major errors can seriously impact your credit score and mean that you’ll overpay on your credit and loans in the long run. With CreditSesame.com, you can monitor your credit and get your free credit report each month. You can quickly identify credit report errors or possible identity theft and correct them.
Follow these easy credit rules and you’ll be well on your way to acing Credit 101!
Erin Renzas is a lifestyle expert and the Editor-in-Chief at Credit Sesame — helping you to make smarter financial decisions, save money and live richly. Before joining Credit Sesame, she was a home and lifestyle editor at Shape, California Home + Design and iVillage.
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