Tips for Avoiding Bad Credit as a College Student

Written by  //  2023/01/09  //  Academics  //  Comments Off on Tips for Avoiding Bad Credit as a College Student

Tips for Avoiding Bad Credit as a College Student

As a college student, finances can get rough, and talking about money can be uncomfortable. However, it’s important to keep your finances and credit history in good condition so that you’re set up for success in the future. With a good credit history, you can apply for a home, personal, or auto loan with low-interest rates and reap many other benefits.

Here are a few tips for avoiding bad credit as a college student to keep your score afloat.

Start Building Your Credit History

Your credit score depends on your credit history. Without a solid credit history, receiving car loans or applying for an apartment is more difficult. Start accumulating your credit history and establishing a credit line by opening a credit card or taking out a small loan.

However, you should avoid opening too many credit cards or taking on a loan that you can’t pay back, as these actions can damage your score.

Open a Student Credit Card

Some major credit card companies will offer credit cards specifically for college students. They realize that college students often have zero to little credit. These credit cards also work for students who may have credit but may not qualify for a regular credit card. Use this opportunity to practice paying your bills on time and being responsible with your spending.

Pay Your Bills on Time

Whatever you do, pay your bills on time. Consistent paying your bills will take you a long way after college and help boost your credit score. A late payment can hurt your credit score and make it harder to get loans or other credit cards in the future.

If you already have credit cards you need to pay off, we recommend creating a debt snowball. Start by paying off your smallest balance and move up to your largest. This method allows you to gain momentum, making it easier for you to knock out these balances.

Frequently Check Your Credit Report

Frequently checking your credit report will help you keep track of spending and pinpoint any fraudulent charges. More recently, credit card scamming has become a more prevalent threat.

It’s always best to check your report at least three times a year. Your credit report shows your credit cards, loans, payment history, and other forms of credit linked to your name and social security number. You can dispute any incorrect aspects to improve your score.

Keep Your Bank Account Afloat

Many college students consider it a rite of passage to eat nothing but ramen noodles or food from the cafeteria. While it builds character, it’s best to skip this college “tradition” of not having enough money for the basics on hand. Keeping your spending in check is the major key to avoiding bad credit as a college student, and avoiding overdraft fees or low funds will help.

At the end of each month, create a monthly budget for the next month to ensure that you can pay all your bills on time.

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