SWIPE? Not A Match!

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Finance, Latest | by — February 22, 2019

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We get it. In a world where casual scrolling can get you a date, meal or outfit, it’s easy to get caught up with the obsession of swiping. After opening your first credit card bill and hiding it from your parents, you realized maybe a quick swipe isn’t the best approach to everything. Before having a complete breakdown, we got you covered! We chatted with Rod Griffin, Director of Public Education for Experian, and he gave us the rundown on keeping your college credit in tip-top shape!

via GIPHY

Many students hear the words ‘credit score’ in high school + college but truly don’t understand its value, what is credit + why is it so important?

Credit is simply obtaining goods or services and then paying for them at a later date under terms agreed upon in a contract. Managing credit is crucial to starting on the right path to your short and long-term financial goals. It might be a cliché, but knowledge truly is power.

Your credit accounts are reported in your credit history. A credit score is a tool used to analyze the information in your credit history. Think about a paper you write for class and the grade a teacher assigns to that paper when you turn it in. Your credit report is like the paper. A credit score is like the grade your teacher or professor gives your work.

 

Your credit report is a historical record of how and when you pay your bills, the debt you have accrued, and how long you’ve had credit accounts for.  A credit score is calculated using the information from your credit report at the moment the report is requested and indicates the likelihood you will not repay a debt as agreed.

There are five key factors that impact your credit score: how often you pay bills on time, how long you’ve been managing credit account, how much credit you’re actively using compared to your total available credit, the different types of credit you are using, and how many companies or lenders have been checking your credit report.

Credit reports and scores are important because they are used to help lenders and businesses determine whether you will be a good, reliable customer. Lenders use credit reports and scores to decide whether you qualify for a loan, a credit card, or a mortgage. What many don’t realize is that credit reports and scores also play a part in whether you can get the latest cell phone, qualify for an apartment lease or what interest rate you’ll pay for a credit card. They also can affect how much your car insurance rates are and how much of a utility deposit you might have to pay to start electric service.

Having good credit can even play a part in getting your dream job – although credit scores are never used in employment decisions.  Employers get a condensed version of the credit report so they can see if you have been financially responsible without all of the personal information or details about these accounts.

From swiping for textbooks to shopping for a new wardrobe, what are some bad habits students have that lower their credit score without them being aware of it?

Students often get credit cards to use in case of emergencies, but don’t realize pizza on Friday night really isn’t one. One of the easiest mistakes that students make is using a credit card without thinking ahead about how they will repay the debt. A common pitfall for new credit card users is to max out their credit card, without the funds to pay it back. It opens a dangerous path towards missed or late payments and insurmountable debt that are guaranteed to damage your financial future. The best way to avoid that is to never overextend your credit: keep your credit card balance below 30% of your credit limit, and always pay your bills on time, and if possible in full every month.

Student loan debt is a growing problem for many young people. What many students do not understand is that they don’t have to accept every penny offered. They should know how much they actually need to cover their education expenses and take on as little student loan debt as possible. High student loan debt can stand in the way of buying a home and other important financial opportunities after graduation.

Tossing bills and hoping they magically disappear seems to be a trend many students do if they don’t have the funds, why is avoidance a bad idea + what are some ways students can be proactive in this situation?

Dealing with a growing stack of bills can feel overwhelming, but avoiding your financial responsibilities are a surefire way to cripple your future opportunities, even if it feels good in the short-term. Ignoring bills could make renting an apartment, purchasing a car, or securing financing for a home or business incredibly difficult, if not impossible. Students can be proactive by understanding when bills are due and how much is due, and develop a plan to satisfy their debts.

If you know you are facing problems, talk with your lender, utility company or cable provider to work out a repayment plan. Doing so can help reduce the negative impact on your credit history. There are a number of options for managing student loan debt. Being proactive can help protect your financial future.

 

With little to no money in college you can have a tight financial flow during this time, what are small steps that you can take to raise your credit in college?

Having your parents include you as an authorized user on their existing credit card, or setting up a joint card, is a great way to build positive credit history. Not only will it show lenders that you can be trusted with credit lines, it opens up an opportunity for you to learn from people with experience in managing their credit and broader financial activities.

If you are renting an apartment, you may be able to have your positive rent payments reported. Doing so can help you establish your credit history and start it in a positive direction.

You might also consider opening a secured credit card account. That means you deposit money in a savings account that is tied to the card. If you don’t pay on time, the lender is protected – or secured – because they can withdraw payment from your savings account. However, they would still report the payment late, so be sure you always pay on time. If you do, you can build a positive credit history and start saving at the same time.

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In some cases the damage has already been done, what’s the first step out of the school to raising your credit after graduation?

One way to instantly increase your credit score as a graduate is by using Experian Boost, a free service that incorporates your utility and mobile phone payment history into your score. This can help you build up more credit history, which helps improve a credit score. It is a great first step but don’t stop there – make sure to pay all of your bills on time and don’t take on too much debt.

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