College students typically have a lot on their minds and may not give much thought to their credit. This could be a mistake because there are a few reasons why college students need to worry about their credit more than anyone else. Establishing good credit habits in college can help students to have a solid financial future and avoid needing co-signers for loans.
The Beginning of a Credit History
In the college years, students may be extended credit for the first time. This may be in the form of a student loan, an auto loan, or a student credit card. The credit history they establish during these years sets the tone for the years to come, and students may not realize that being irresponsible with early opportunities for credit may create financial difficulties in the future.
It can be easy to forget to make payments on time when students are distracted by studying, socializing, and making plans for the future. It’s important for college students to understand that paying bills in a timely manner has a big impact on their credit history and credit score.
Why Credit Matters
Credit can impact many different things that may come up during the college years or soon after graduating. Examples of things that may be impacted by a credit score or credit history include:
- Getting car insurance
- Getting a cell phone
- Getting a job
- Renting an apartment
- Being approved for a credit card or loan
Those that have bad credit may find that they’re approved for a loan but end up paying a higher interest rate, which means paying more money over the course of the loan. Cell phone plans and car insurance policies may require a deposit for those who have bad credit.
Actions Students Should Take to Protect Their Credit
College students should be proactive about protecting their credit. The most important action to take is to make sure all bills are paid on or before the due date. To prevent forgetting payments, students should talk to their bank about setting up automatic payments.
College students who receive multiple credit card solicitations should avoid applying for multiple cards and should also avoid borrowing the entire amount that’s available to them. For the best credit score, they should try not to use more than 30 percent of available credit. Borrowing money should only be done when needed.
Credit Report Accuracy
As many as two out of every three people find errors on their credit reports. Students and others who have borrowed money in the past or currently have outstanding loans or credit cards should review the information on their credit reports periodically to make sure there are no reporting errors. Check to make sure there are no errors in personal information, loan balances, or loan history.
Dovly is an automated credit repair engine. We can help work with credit bureaus to get misinformation removed from your credit report so you can have the best possible credit score. Get in touch with Dovly today.