Did you know that even your early financial missteps can impact your credit many years down the road?
As a student, you might think everyone makes mistakes, and that’s true. But in the case of finances, you can’t wait until after graduation to think about how to improve your credit. Start now to build up a good credit history. Your financial moves as a student can affect your future credit score – the very one lenders will look to when you want to borrow money from them to buy a car or a home. Start making good financial decisions now so you’ll have a reliable credit history when you graduate and are out in the working world.
Students often think their lack of extra funds prevents them from building a credit history, but your actions document how reliable and responsible you are with your money, no matter how much or how little you have.
Here are a few things to do now to start building good credit.
The easiest way to start building good credit is to pay every single one of your bills on time, every time. A day late is still late. Two months of paying late with 10 months of paying on time is good, but in the eyes of lenders, it is still late. Paying your bills on time is the most reliable predictor of what you will do with a future lender’s money, so get yourself into a good bill-paying routine. And if you have student loans when you graduate, pay them on time.
Stores offer you all those great discounts and incentives for getting their credit cards because that’s how they can make money. But when a lender looks at someone with 15 different credit cards, all they see is someone who can max out those cards and potentially rack up tens of thousands of dollars in debt.
Choose your credit cards selectively. Having one or two credit cards from a major bank is a good idea for convenience, but only charge what you can afford to pay off. If you absolutely have to have a card from your favorite store to earn extra discounts, choose just one store. And don’t sign up for all kinds of cards thinking you can just cancel them – that also shows up on your credit report. Watch the interest rates on any cards you apply for as they vary greatly.
Track Your Credit
It’s up to you to make sure your credit report is error free. Luckily, you can request a free credit report from AnnualCreditReport.com. Through this site you can request a free credit report from the three top credit report bureaus (Experian, TransUnion, and Equifax) once every year. Your best bet is to request one from a different bureau every four months so they are staggered throughout the year. That way, you won’t have to pay for the reports, but you’ll be able to keep current with what’s in your report. Go over the information carefully (financial, employment, etc.) and immediately report any discrepancies.
Your financial health isn’t something you can ignore. You have to pay attention to it, treat it with careful thought, and fix any problems immediately. What you do now can have lasting impact on your future financial goals.