The importance of building good credit has always been emphasized to consumers. As all things in the market increase in price, building good credit is an essential, now more than ever. Apart from the chance to get easy approval, an impressive credit history can win you better rates and flexible repayment terms from lenders and insurers.
For job seekers, it can make the difference between getting hired or not. Although an employer cannot refuse an applicant based on his/her credit standing alone, it can be a major factor that will give you the edge among your candidates vying for the same position.
This is why students in college are encouraged to start building credit history by getting a student credit card. As soon as you have your first credit card, what are the steps that you can do to ensure that you will be building up good credit history? Check out the following advice:
Check your credit report. It is not uncommon for reports to contain errors or for a mix-up to happen. Someone else’s credit information may damage your personal credit either because of erroneous reporting or because an Identity Thief has been making illegal transactions under the pretense of your identity.
Consumers are entitled to a free credit report once a year from AnnualCreditReport.com. Make sure that you do take a look at your report at least once every 6 months to make sure that it contains accurate information.
Understand how credit scoring works. Understanding how your credit score is calculated can help you become more conscious on taking care of your credit standing. You need to keep in mind that payment history or timeliness of payment comprises 35% of your final score. Hence, even a few late payments on your part can really pull down your rating.
Another important factor is how you use your credit limit. Maximizing your borrowing limit, particularly on your credit card account can send out a negative impression to lenders and insurers. Thus, if you must use your student credit cards for a purchase, keep it minimal (ideally, below 40% of your limit) and try to pay off your full balance before the payment due date.
Some people have the misconception that maintaining a balance on a credit card can help in having up a high credit score. On the contrary, doing so only increases your risk of having bad credit. What’s really more important is paying off your debts completely and on time.
Understand your credit card’s Terms and Conditions. You need to familiarize yourself with the rates and all fees associated with your chosen credit card for students. Have you taken the time to carefully read the fine print before signing up your application? Even if you’ve had that credit card for quite some time, it is still recommended that you review the Terms and Conditions to avoid unpleasant surprises in your bill.
Check your monthly credit card statements. Before making your payments, cardholders are advised to carefully examine their bills to make sure that there are no errors or unauthorized charges in their account. If you find unfamiliar charges, call up your bank or credit card issuer and ask for corrections. Remember that you have the right to dispute errors as stated in the Fair Credit Reporting Act.
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