College life brings a host of new and exciting experiences in the various aspects of your life. Financial independence and responsibility also come into play. While your achievements are important in putting you on your right career path, a good credit score is paramount in bettering the deals you will get when renting or buying a home, purchasing a car, getting a cellphone plan, applying for a student loan, or in some instances, getting employment.
This calls on your effort to not only build but also maintain good credit. It may sound complicated and intimidating especially when you don’t know how to go about it. Below, is all you need to know on how to maintain a good credit score in college.
Taking Advantage of your Parent’s Good Credit
This is commonly referred to as ‘piggybacking’. It allows people with bad or no credit to enjoy a spillover of other people’s good credit. It is a great way of establishing and maintaining your credit especially if you need a little help in managing your budget. For you to qualify for this, you have to become an authorized user of your parents’ accounts.
This comes in handy especially if you can’t get your own credit card; according to the Oct 1st, 2013 Credit Act report, students and other persons below 21 years of age cannot get their own credit cards without proof of income or at least a co-signer. Apart from the credit boost you get from your parent’s account, your credit card use is forwarded to credit bureaus in your name.
Get the Most Suitable Credit Card
Your ability to qualify for a credit card opens you to the opportunity to choose from a variety of cards. You should research and shop around to find out what these cards have to offer before making your choice. Some of the benefits to look out for include low-interest rates, no annual fees, convenient credit limits, and other competitive incentives.
If you have “no credit” consider applying for a secured credit card to start building a fresh record.
Better still, you can opt for student credit cards. These come with incentives such as cashback rewards, limited credit history requirement, no annual fees, and 0% introductory APR among other benefits. Your own credit card comes with sole responsibility. This means that it’s up to you to stay on top of your billing statements so as to improve and maintain a good credit score.
Always Pay your Credit Balance
Your payment history accounts for 35% of your credit. Good credit of course depends on the timely and full payment of your balance. Inability to pay or late payment may attract additional interest, accrue more debt and negatively affect your credit.
This can take a long time to repair. Besides this, it is also a sign that you are living beyond your means. Ideally, your credit balance should be about 30% of your credit limit or below.
Tip: The higher your credit balance in relation to your limit is, the worse your credit becomes.
Pay your Bills on Time
Late or failed payment of rent, utility bills, parking tickets, library or school fees, and other payments can harm your credit; especially is if they are sent to collection agencies and reported to credit bureaus. Ways of beating this include setting up payment reminders and electronic billing. You can also organize auto payments with your bank to ensure that timely payments are done.
If you live in an apartment, you might get credit for full and timely payments. You can take advantage of a rent reporting program that transfers your payment reports to the three major credit bureaus; Experian, Equifax, and TransUnion. This consequently improves your credit. However, your landlord needs to be registered and the lease needs to be in your name.
Limit Applications and Inquiries for New accounts
Numerous credit inquiries negatively impact your credit score. In the event that you need to make new credit applications that warrant hard inquiries, concentrate them into a period of 14 days in which they will factor as one inquiry.
Once you decide to get a credit account, get all the facts right to avoid the urge to close and open others every now and then. Short credit histories with several new accounts are seen as riskier compared to a few accounts with long credit histories. When you close a credit card, you not only lower your available credit but also shorten your credit history both of which can reduce your score.
In a Nut Shell
Maintaining a good credit score in college is important if you are going to get any good deals on personal credit in the future. This requires vigilance on your part to ensure that you do not do anything that can have a negative impact on it. When all is said and done, it all comes down to personal financial responsibility.