Being on your own for the first time can be exciting and liberating, but be mindful not to make the following credit mistakes that could haunt you for a very long time.
Abusing easy credit
As a student, you are an easy target for credit card companies. You are easily approved and can spend money like crazy, even applying for more credit when you run out. Credit companies believe you will have a high earning job later in life, becoming a loyal customer. That and the hope that your parents might bail you out if you get stuck. The trick is to pay cash, as you are less likely to overspend.
This rule couldn’t be simpler: Don’t Skip a Payment! If nothing else, at least pay the minimum payment so you won’t be saddled with late fees on top of your compounding interest. Your missed payments can remain on your credit report for up to seven years.
Making late Payments
It doesn’t matter how faithfully you pay your credit card bill each month if you accidentally make even one late payment. The credit company will up your interest rate faster than you can say “graduation.” Keep a record and calendar for payments, using every notification the company offers you to ensure your payment is on time.
Budget, budget, budget. You’ve probably heard your parents say this word umpteen times since you started talking about college. Your budget is directly related to your plans and even your emergencies. Start this very important habit now and you’ll flourish through graduation and as you enter the real world.
Mismanaging Student Loans
If you don’t know how to budget, then when student loan money comes in at the beginning of a semester, you may find yourself spending it before you are supposed to. Be careful of impulse buying and keep school money in a separate fund.
Everyone makes mistakes. If you made a late payment or skipped one altogether, your creditors may be willing to negotiate the terms of the loan or rate. Don’t ignore the calls, emails and voicemails. It will only make matters worse for you.
Co-signing for Friends
We make lots of friends in college and, of course, want to help out. Don’t even think about helping another student finance an item or co-sign on a loan. Your financial business is private and you’ll have no control over their spending, budgeting and ultimately, their responsibility factor.
Disregarding your Credit Score
Always keep an eye on your credit score. The Credit Repairmen can help you understand your credit report fully and what each item means, as well as help you find problem areas and solutions.
College is a time for learning, exploring and gaining new experiences. Stay ahead of the pack by utilizing good spending habits and slowly growing good credit. The Credit Repairmen are here to help you succeed.