The currency of the college years is good grades. Once you graduate, your credit score often dictates much of your financial path going forward. There are several entities who will look at your credit and potentially make decisions based on your history:
- Your Employer
- Insurance Companies
- Landlords
- Lenders
So if you are just starting out, or even if you are starting over, here are some really useful tips to help you build your credit:
- Think before you borrow. Just because someone offers you a loan doesn’t mean you have to take it. After all, the more interest you pay, the less money you have.
- When you do borrow, only borrow what you need and only utilize the right type of credit for your situation. There are two types: open-end (like a credit card) and closed-end (car loan & mortgage). Having a variety of types will help increase your score.
- If you can’t get credit, consider using a credit union where you may qualify for financial products you wouldn’t otherwise get elsewhere. If this doesn’t work, you can always fall back on a secured credit card where you have a security deposit that guarantees your borrowing. Finally, if all else fails, a co-signer may help.
- When you do get a credit card, don’t use more than 30% of your available credit.
- Always pay your bills on time. Missed payments will make a huge ding in your score.
Bottom line: there are several ways to build your credit, but always make sure you follow these tips to keep you on track.