Many teenagers are excited about their college years as it is the time to celebrate independence and prepare themselves for great opportunities that await them in the corporate world. But practicing financial independence may not be as easy as it sounds.
If you are a college student or just about to enter your freshman year, what should you expect and how can you be prepared for the challenge of being financially independent? In this article, let’s talk about the importance of building good credit and practical tips that you can practice as early as now:
Why Good Credit Is A Must
Why strive to build good credit while you’re in college? Having good credit will help you get a good deal when you apply for loans, insurance, cell phone plans, and apartment rentals. In fact, an impressive credit history can give you the edge over your competitors when applying for a job.
This is why young people are encouraged to start building credit history while they are still in college. Get a student credit card and use it to pay for some of your schooling expenses. Be consistent in submitting your payments and you will surely be able to build good credit.
Practical Tips On Building Good Credit
Stick with one student credit card. One credit card should be enough for a student to build credit. While it’s easy to sign up and get approved for a new credit card, keep in mind that having too many cards may only tempt you to spend more than you need to. Since you do not have a regular job yet to support you, it’s best to stay away from risks rather than get too close to bad credit.
Be frugal. Frugality is truly a virtue and for young people, they can learn a lesson from those who got stuck in bad credit because of uncontrolled spending. Before buying anything, seriously consider if you can afford to pay it with your allowance. Recognize the difference between NEEDS and WANTS and avoid impulsive buying.
Save your money. Set aside money for emergency and future use. Open your own bank savings account and contribute as much as you can. If you take on part time jobs during spring breaks or summer vacation, then be sure to set aside some cash in your savings account.
Pay all your other bills on time. Be it with your student credit card or other creditors, make it a habit to submit your payments on time at all times. Instead of waiting for the due date to arrive, post your payment early if you already have the money. By paying bills on time, you can save yourself from additional charges (interest rate, late penalty) and the risk of bad credit.
Manage your student loans wisely. See to it that you only spend your student loan to support your college education, not your personal whims. Even while in college, contribute to your student loan payment whenever you can. This way, you can cut down your student loan debt even before your college graduation.
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