Financial Wellness Tips for College Grads

During college, no one really teaches you the importance of establishing a good credit. But as you enter into the real world, it’s important to be aware that your credit history will affect you getting a mortgage, car loan, apartments, and even potential jobs. Your credit history is a key factor making up your credit score.

The first step is to access your credit report on Annual Credit Report.com. Make sure all the information on the report is accurate and report any damaging discrepancies.

The best time to build a credit history is when you’re young, and the best way to start a credit history is to get a credit card. The reason why is because without a credit history, you come across as a high risk to lenders and creditors, which means high interest rates until you establish good credit. Department store and gas cards are typically easy to get and can be a good place to start if your options are limited. Make sure the company reports to the major credit bureaus so that it is reflected on your credit report. Apply for one credit card at a time. Each time you apply for credit, creditors record this in your credit file as an “inquiry”. Too many inquiries can hurt your credit score.

If you want to lower your interest rate, consider having a close friend or family member co-sign a loan with you.  Because your payment history will now appear on their credit report as well as your own, it’s crucial that you pay your bills on time.

The secret to keep your credit score high is to spend responsibly within your means, and pay off your balances in full and on time every month. This is important because your payment history contributes to 35% of your credit score.

Student loans are a form of debt, and are therefore taken into account as part of your credit score. Be sure to manage your debt obligations and repaying them on time, every time. Consolidate your student loans, so you have one monthly payment, and make all your payments on time. A late payment of even 30 days can show on your credit report for up to 7 years. Timely loan payments are the best way to build a good credit history.

 

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