Rachael Goodrum
Online Publishing
Article 4
College Tips Amidst the Economic Crisis
With the seven billion dollar bail out happening around us and credit being harder
to come by, what does that mean for college students who will soon be graduated and
moving into this unstable economy? Not that we are not a part of it now, in a sense we
are, but later, after school, credit scores will affect us more than we maybe able to handle.
Because it’s harder to get a loan for anything now, and you will most likely need one
after you graduate for something, it’s a great time to get a head start on building good
credit. Starting in college can help you build credit in a more controlled environment.
Credit is based on several things that are attached to our name as we go through
life. Credit affects if we get a car, house, or personal loan, how much deposit
requirements are on things like cell phones and the interest rates of our loans and credit
cards. Higher rates on all of these can end up costing you a lot more money in the end. It
can even affect if you get a good apartment or not because some apartment complexes
check to see if you have a good credit score. If you’re asking why, it’s because your
credit scored is negatively affected by late or missed payments, and your landlord may
see this as a way to check and see if you can pay the rent.
Credit scores allow lenders and others to see how you have handled your money.
Positive things like paying your bills on time gives you more points, and things like
paying late or not in full can take points away. So here are three simple ways to build
credit.
Credit can take years to build. College is a great place to start because you are in a
more controlled environment especially in the dorms because you don’t have to pay for
rent or utility bills. First, putting one bill like a cell phone in your name can help you start
building credit. Make sure you don’t have a plan that is too high to pay every month and
have enough minutes that you don’t go over and run up expensive overage fees. Paying a
bill every month on time and in full can help build you a positive credit score. You never
want to miss a payment or pay late because it stays on your credit record for years.
Tying your monthly payment to your bank account can assure that you don’t miss
a payment. It will automatically come out of your account on the day or a few days
before it is due and there will be no way you can forget to pay it. The only thing you must
do is make sure you put the money in there.
The second way to build credit is if you have a credit card. You can use it to your
advantage to build credit and build up your credit score if you know how. Using your
credit card can help you if you keep the balance lower than 25% of the total available
credit and pay a little more than the minimum each time. Just as a credit card can help
you, it can also hurt you if you rack up your debt to more thank 80% of the available
credit and can only afford to pay the minimum balance. Also, credit cards have expensive
consequences for not making the minimum payment on time or missing a payment all
together. Not only does it go on your credit score, it also can make your interest rate
double and get late fees that can be almost as much as your minimum payment itself.
Be sure to keep your balance down by only buying things you need or for
emergencies. This means gas, food, or books. This doesn’t mean booze or adult videos.
Plus, no one wants those types of things showing up on a credit card statement. If you
really need these things use money you already have.
Now don’t get trapped into credit card snares that seem appealing to college
students. One is fundraisers on campus that require you to fill out a credit car application
and gives you a free t-shirt in return. The same goes for credit card mailers that say you
are already approved. You’re not, they just need your information to finish the
application. Sending these back or filling these out, even if you get denied, negatively
affects your credit rating. This is because every time you apply for a credit card, no
matter for what, it shows up on your credit report, and creditors see this as you needing
money and not having available funds as the reason your applying. The same goes for
savings at stores. Sometimes I get offered 10% to 20% off my purchase if I apply for the
company card, and I’m told that even if I don’t qualify I get the discount for filling it out.
This has happened in places like Gap, Victoria’s Secret, Bath and Body Works, and Old
Navy. But even though this seems like a deal because I would get the savings and could
cut up the card later, it still counts as a credit application and can negatively affect my
credit.
The third thing that can help you build credit in college is getting a job. The times
that you are employed are recorded by credit companies. The longer you have a job, the
better your credit score will look. College has work study programs that allow students to
work a few hours a week and earn a little extra cash. Even if you don’t need the cash
because you work on the breaks, it helps to have the job because long periods of
unemployment negatively affect your credit score, student or not.
If you don’t need the money but take the job anyways then this is the perfect time
to open a saving account, deposit the whole checks in there and live on what you
originally had set aside. Saving money is important in these rocky economic times. For
those who need the job to live on, savings is still a possibility. Opening a savings account
can help you get through a surprisingly high bill or emergency, and you won’t have to
worry about using your credit card. Setting aside 10% of your paychecks can help you
save a small amount of money every couple weeks. Another saving trick is finding a
“piggy bank” of some sort to hold you change. Make a pact to yourself that you will not
spend a single piece of change and put it all in your piggy bank. Every time it is full bring
it to the bank. Luckily now most banks don’t make you roll it if you put it in a zip lock
bag and a filled out deposit slip with the amount blank. This is a good way to find extra
money with out make a big sacrifice.
So a quick review:
Good for your credit:
1. Paying your bills on time and paying in full
2. Keeping your credit card balance under 25% of your available credit
3. Keeping regularly employed, even if it is only a few hours a week
Bad for your credit:
1. Paying your bills or credit cards late or paying lower than the minimum
2. Using over 80% of your available credit and applying for many cards
3. Being unemployed for a few months at a time
These simple tips can keep you from exiting college with a bad credit score or no
credit at all. Keeping these tips written down in your wallet can help you keep these
things in mind when shopping or using your money or cards in anyway. The credit crisis
can be overwhelming but if you start off right during your college years then later on
your credit score will thank you and you will thank yourself.
Work Cited:
http://www.ehow.com/how_4537116_money-saving-tips-college-
students.html?ref=fuel&utm_source=yahoo&utm_medium=ssp&utm_campaign=yssp_ar
t
http://www.creditreport.com/info/credit-scores/affect-credit-
score.asp?src=foverture&kwd=815&utm_source=am974&utm_medium=300&utm_term
=815&ctcampaign=27&ctkwd=815