College Students Need to Watch Their Credit

While you may think that college is all fun and games, keeping track of your credit score and doing your best to keep it as high as possible is no laughing matter. The fact is, having a “frat party” with your buddies can wait but a good credit score shouldn’t.

For most people, college is the first time in their life that they actually begin taking responsibility for their financial affairs. Most get their first credit card, their first car  insurance bill and, for some, their very first part-time job while they’re in college. While the responsibilities of college life, especially if you have a part-time job, can be daunting, now is actually the perfect time to obtain your very first credit report and learn about what you can do to keep your credit score sterling.

The fact is, once you actually do graduate from college (don’t go pull and “Animal House” on us, okay) the financial obligations that you’ll be facing may very well be quite large.

A credit report contains quite a bit of vital information, including a list of any credit cards that you might have, small loans that you might have taken out and any debt that you have as well. A credit report can also play a big role in whether or not you will get a job after college as well as being able to lease an apartment or get a loan for a new car.

The fact is, since you probably won’t have a mortgage or multiple credit cards when you first graduate from college, your credit history might be a bit shallow, making whatever information you actually do have on your report not only important but glaringly obvious.

Not only is it a very good idea to keep your credit score high in your credit report sparkling clean, knowing exactly what your credit report means is rather important as well. For example, you might think that paying your cell phone bill every month on time or making sure that your car insurance is always paid will reflect well in your credit report, but the fact is that this information has no bearing on your credit report whatsoever. On the other hand, if you actually stop paying those bills and they’re sent to a credit collection agency, that information will definitely appear in your credit history and negatively affect your credit score quite quickly.

In short, college is not only an ideal time to learn about credit, and educate yourself about your credit report and what it means, it’s also a great time to form some excellent credit habits that will help you throughout your working life. Paying bills on time, not overextending your credit, making sure that your credit utilization ratio is less than 10% and other important things like that.

So while you’re studying hard in college (we hope), and having a good time (but not too much of a good time), make sure that you also stay on top of your credit report and your credit score so that, when graduation day finally does arrive, you’ll be ready to hit the “real world” with both feet and be off and running.

One Response to “College Students Need to Watch Their Credit”

  1. ES4MI February 5, 2014 at 10:58 am #

    Great post!

    “For most people, college is the first time in their life that they actually begin taking responsibility for their financial affairs.”

    I find it sad that we don’t teach our children the fundamentals of money management at an earlier age. Why don’t we use some of our tax dollars towards educating middle school through high school children on the importance of financial literacy? Having been through college myself, I found it amazing how many of my fellow college students immediately signed up for various credit cards during the first week just to obtain free “give-away” sun glasses or t-shirts. They then maxed out those cards and left college with enormous amounts of debt…and some are still paying those cards off years later. We do a disservice to ourselves and society as a whole by not preparing our next generation for financial success. Financial learning must begin in the classrooms at an earlier age.