Credit for Students: How to Get an Early Start on Responsible Credit Use
Whether entering their very first semester as a Freshman, or continuing on as a seasoned Sophomore, Junior or Senior, most college students face the same question at the start of every school year: how to pay for the necessities, while still maintaining the rigorous all-day schedule every college student must endure? To provide for the “right now,” many college students end up taking out a private line of credit – sometimes with disastrous results to their credit scores later on down the line, if done incorrectly. We here at Quality Credit Repair have put together a cheat sheet on how college students can use credit to pay for the day-to-day necessities, while protecting their future and maintaining a high credit score.
- Choose the right starter card. With very little credit established by age 18, most college students aren’t eligible for more than a few hundred to a thousand dollars’ worth of credit from reputable establishments, which limits the plans and cards available. Doing research as to what card is right for you– focusing on what kind of perks you’re looking for, and what best suits your lifestyle, along with low interest rates and no fees– will help you get the most benefit from your card. Student credit cards often waive the annual fee, provide cash back and are more forgiving than regular credit cards when it comes to late payments (not that anyone should get into that habit!). Student cards are also often oriented toward a college lifestyle, and will let reward points count more towards things like textbooks…which is what you need a card for anyway, right?
- Read Your Terms and Conditions. We know – you’ve got enough reading to do at the start of the school year. Regardless, understanding the way your new card works is imperative not just to your financial health, but also when it comes to profiting from your card’s rewards. Make sure to have your banking representative explain your credit’s Annual Percentage Rate (APR), rewards program (including expiration dates, limits and what the purchase categories are), and fees, which can sneak up on card users in the form of processing and application charges.
- Learn from others – avoid the most common credit mistakes. Misuse of credit is one of the most common “but it won’t happen to me!” errors that are regularly made. Individuals routinely see friends and family members develop credit issues by ignoring simple guidelines, and yet very often fall down the same hole themselves. Carefully sticking to the following rules can greatly help protect you from serious credit issues later on down the line.
- Avoid taking out a cash advance. It’s rarely worth it! A fact that is little-known by many first-time credit card users is that cash advances incur a fee as well as a much higher interest rate than a purchase. Cash advances should be limited to true emergencies.
- Never charge more than you can pay. This is the number-one issue that leads to bad credit: even charging just small amounts more than you know you can reasonably afford can easily lead to spiraling debt. Interest can pile up at a startling rate, and many people find themselves quickly buried in debt. Carefully tracking all purchase, which can easily be done using websites such as mint.com, will help you understand when you’re overspending.
- Pay your balance completely and on time. One of the most basic tenets of responsible credit use: make sure to pay your bill on time! It may seem obvious, but many young credit users allow their pay period to slip by unnoticed or fail to pay the minimum payment, unaware of the potential severity of consequences. In reality, once a card user has surpassed the number of “free passes” and the grace period allowed by a lender, he or she will start to see their interest add up every day until a balance is paid off. If you can’t pay off a full balance, you should strive to pay as much as possible from the total you owe each month in order to minimize the accrued interest.
We hope these credit tips have been helpful as you start off the 2015-2016 academic year! For more tips on responsible credit use and information about securing your financial future, be sure to keep up with the best credit report service, Quality Credit Repair’s, blog!