How you manage your student credit card can either make or break your personal credit history. Consider the following tips on how you can use your student credit card to build and maintain good credit:
1. One to two student credit cards are enough. You can acquire up to two student credit cards but anything above this number is risky. Managing multiple accounts is difficult and it increases the risk of overspending.
2. Watch your credit line! Aside for avoiding over-the-limit penalties, keeping your credit limit use minimal reduces the risk of bad credit. Also, it shows potential creditors that you are capable of managing your account effectively and paying your debts on time.
3. Avoid carrying a balance. As much as possible, pay off your monthly balance in full to avoid the interest rate charges and to avoid the risk of bad credit. Better yet, don’t charge a purchase to your credit card if you know you will not be able to pay it in full by the end of the month.
4. Pay on time. Of course, if you want to maintain good credit, you need to be consistent in submitting prompt payments. Take note that payment history makes up 35% of your total FICO score so even occasional delays can badly affect your final rating.
5. Communicate with your creditors. In case an emergency situation prevents you from paying on schedule, it’s best to call up your creditor right away and explain why you will not be able to pay on time. Request for an extension of due and ask your creditor if they can NOT report the late payment to the credit bureau. Most creditors would be considerate to give in to your request especially if your records show that you have been always been a trusted customer.
6. Don’t charge unplanned purchases to your student credit card. To avoid overspending, make sure that you do not use your student credit card on an impulse. If you plan to use your credit card to pay for your groceries, create your shopping list and stick to it. Even if you see an item on sale, if you did not plan to buy it in the first place, don’t charge it to your card. If you really want to buy it, use cash to pay for it. If you don’t have enough cash, then it’s best to skip the purchase.
7. Review your credit card bill. Make sure that you’re not paying for charges that are not yours. Check your monthly billing statements that your credit card issuer sends you. If your credit card provides access to your account online, make it a habit to log-in and check your account regularly. If you do not receive your credit card bill on time, call your issuer immediately and inform them about the delay.
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