Credit score among factors to financial success
Obtaining and maintaining a good credit score can sometimes be challenging, especially for college students who typically do not have money flowing out of their pockets. But, it is not a hopeless feat.
BB&T relationship banker Patti Aliston said that there are ways for college students to get their feet wet in the realm of credit scores. It starts with finding somewhere to apply for some type of credit card. Aliston suggested applying for one with a department, furniture or jewelry store to start a credit foundation, but also said to be aware of who they report to.
“Make sure the store reports to the credit bureau, otherwise, you won’t be accomplishing anything towards building good credit,” Aliston said.
GCSU economics alumnus John Camp said that a good deal of college students put off getting a credit card until after they graduate, but he suggested they should do the opposite.
“I would suggest getting a credit card in college because it’s easier,” Camp said. “It’s pretty easy for college students to get credit cards because the credit card companies realize that most parents will help out if the students get into financial trouble and are unable to pay.”
Cosigning with parents is another way Aliston proposed students should begin building credit. She said that cosigning with parents that maintain a good credit score can be an easy way for students to start laying a credit score foundation. The only drawback is that if students make any mistakes, they could potentially harm their score along with their parents’ score as well.
Camp and Aliston both advised using credit responsibly in small amounts at first to make sure it can be paid off at the end of each month.
“One good strategy is to use credit to make small purchases on things like groceries and gas that you won’t overspend on,” Camp advised.
Credit scores are based on several different factors including the timeliness of payments, how much debt is owed and the length of credit history. With these various factors in mind, there are several ways to improve a credit score and become more applicable for receiving loans and new credit cards.
One of the largest factors involved in a credit score is the timeliness of payments. Camp stressed that bills should be paid on time at the end of each month. Aliston advised paying the bill as soon as it is received instead of waiting around until the payment due date.
“Try not to max out your credit,” Aliston said.
Responsibility in spending plays a large role in a credit score and maxing out a credit card does not reflect responsible financing to loaners and credit companies. Keeping balances low and affordable each month shows responsibility and can help to improve a credit score.
If debt is owed, pay it off as quickly as possible. Keeping debt, or even moving it around between credit cards has the potential to backfire and lower a credit score a good bit. Camp said that is a good idea to only have one credit card to start things off. Having too many can be confusing and even harmful to a credit score.
With these tips in mind, college students have the potential to being building good credit scores immediately and become quality applicants for future loans. They will also miss out on the awful news of being denied.
Posted by Colonnade Archives
on Nov 14 2008. Filed under News.
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