In these difficult economic times, many of today’s college students are turning to credit cards to finance their college education, using them for everything from everyday necessities to books and tuition. Unfortunately, this can result in an excessive amount of debt. Young people are frequently unaware that their bill paying habits will affect their credit history. Many graduates do not think they need to worry about their credit score until they apply for a mortgage to buy a house. So it can come as a shock when they find out that potential landlords, employers and even utilities companies routinely access credit scores as part of their application process. Learning how to manage student loans, credit cards and other debt is essential for college students. Establishing financial skills early on and working to build a good credit standing will affect their lives both now and in the future. A person’s credit history begins with their first credit card. And good credit can help savvy college graduates save money in the following situations:
Insurance scores vs. credit scores Insurance scores are different from credit scores and it is important to understand the distinction. Your credit score is a number that represents your overall credit worthiness; predicting the likelihood of delinquency or non-payment of credit obligations. It encompasses everything you have ever done credit-wise, from your very first credit card to the bills that you pay. Whether you are buying a house, applying for a credit card or looking to purchase a car, your credit score will factor into these decisions. Your insurance score, on the other hand, is based in part on your credit score, but also includes other factors pertaining to your insurance history. For example, with auto insurance, information about age, gender, income, the number of car insurance claims you have made, Department of Motor Vehicles points, your timeliness with payments, etc. all factor into the equation that determines your score. Insurers use this score to determine whether you are a good risk to insure. Developing a financial plan In order to develop a good credit rating, parents and students need to work together on a financial plan for college from the beginning. Specific educational expenses including tuition, room and board, and books and fees can be viewed as “good debt” and can be covered through student loans, grants and the like. Day-to-day college expenses, including personal needs, transportation costs, telephone and other incidentals, are the types of expenses that students should endeavor not to charge on credit cards. In most cases, college is the first opportunity for young people to make independent financial judgments. Carrying high, unpaid balances is one of the quickest ways to incur too much debt and fall behind in payments. If college students plan to use a credit card regularly, they should have limits and know ahead of time where the money will come from to pay the bill at the end of the month. When deciding on a credit card, students should read the fine print and shop around for the best terms. Look for cards that:
How to improve your credit score if it has been damaged
1 Comment
26/7/2019 10:31:52 pm
Young people are frequently unaware that their bill paying habits will affect their credit history. Many graduates do not think they need to worry about their credit score until they apply for a mortgage to buy a house.
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