How Students May Ruin Their Personal Credit

While nobody wants to have bad credit, you unconsciously inflict damage to your credit history without even realizing it. If you are a student or a first time credit card holder, below are some things you need to avoid so as not to ruin your personal credit:

  1. Submitting multiple applications to different companies. Did you know that sending out too many applications to loan companies and credit card issuers can badly hurt your credit? Students usually get a lot of offers from student loan firms and credit card companies so they are prone to committing this error.
    • Keep in mind that each time you try to apply for credit, an inquiry will be made into your credit report. These inquiries will be reflected in your report as well. Having too many inquiries in your report can instantly make you a “Risky” customer in the eyes of creditors and insurers.
  2. Maximizing your borrowing limit. Even if your credit card for students come with zero interest or a low rate, you should still keep your charges minimal (ideally, 40% or less). You should know that your credit-to-debt ratio is a standard factor used in calculating your FICO score. It makes up 10% of your final rating.
    • Being late in making payments. Being late in submitting your payments even just for one day can have a dramatic effect in your credit standing. This principle applies not only to your student credit card but to the rest of your bills as well.
  3. Not reviewing your bills. Carefully examining your monthly statements of account is an important step that must never be overlooked. If you find any error in your bill, you have the right to dispute those charges.
  4. Carrying a balance in your account. Contrary to what others believe, leaving a balance in your credit card accounts will not improve your credit standing. In fact, paying only the minimum monthly due payment increases the risk of debt build-up.
    • To keep a good credit standing, make it a goal to pay your complete balance each month. Doing so minimizes your chances of accumulating debt in your account; saves you from additional credit card charges such as interest rate and late penalty fees; and frees up your credit limit.
  5. If you’re having trouble submitting your payments on time or remembering your due dates, you may consider setting up an automatic payment system with your bank. Remember, payment history makes up 35% of your credit.

    Be sure to read all notices that comes from your credit card Issuer. The new credit card law mandates Issuers to give at least 45 days of advance notice before making changes to their terms. If you do not bother to check your mail, you might be surprised to find out that your interest rate has already increased without your knowledge. By that time, it can be too late for you to complain.

    About the Author

    Samantha Wilson is a consultant for credit cards for students. For years she has written student credit card articles that would help build student credit.

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