Have you completed your list of resolutions for the New Year? Have you included resolutions to improve your personal finances? Consider the following tips on how you can establish and maintain good credit as a college student.
- Look for the right student credit card. If you have not yet applied for a student credit card, consider getting one in the year 2012. However, you need to make sure that the card you choose is right for your needs and lifestyle. Don’t forget to check the interest rate as well as the rest of the fees associated with the card. Choose a student credit card that reports to the three major credit bureaus to make sure that you can establish credit history.
- Cut down your debt if applicable. If you still have unpaid credit card balances, it’s about time to focus on repayment. If you’re having a difficult time paying off your debts, consider asking help from your parents or from a relative who is financially capable. You can also get a student credit card with zero balance transfer rate so you can work on paying off the original balance you owe without incurring APR charges.
- Build up your savings. Do you have personal savings? It’s never too early to start building one. Even while in college, you can begin saving up for the future or for emergency expenses. Open a savings account from your local bank where you can deposit your earnings. You can also save up a separate emergency fund that you can use when unexpected expenses arise.
- Apply for a part time job. Use your school breaks and vacations wisely by getting a part time job. Applying yourself in a job is a great way to improve your social skills and your job skills, while earning money at the same time.
- Keep your personal spending minimal. Are you prone to overspending or splurges? Such unhealthy financial habits can quickly lead to bad credit. If you used to go out with friends to party every Friday nights or every weekends, consider changing your lifestyle. Find practical ways to cut back on your spending. For instance, you can buy second-hand textbooks instead of brand new, buy clothes from thrift shops, and compare prices before purchasing.
- Pay all your creditors on time. Submitting your payments to all your creditors on time is crucial in building good credit history. See to it that your payments are properly reported to the three major credit bureaus (Experian, Equifax, TransUnion). Take note that payment history makes up 35% of your total FICO score, followed closely by credit utilization which comprises 30% of your credit score.
- Monitor your personal credit report. Aside from choosing creditors who report to the three major credit bureaus, you should also make it a point to keep track of your personal credit report. You can order a free copy of your credit report from the three credit reporting agencies once each year from www.annualcreditreport.com or order directly from one of the bureaus for a fee of $9 to 12 per copy.
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