Helpful Hints for College Students Concerned About Good Credit

A good credit score never goes out of style. No matter what the season or occasion, having a high credit score will only ever have a positive effect on your life, availing you of things like prime rates for credits cards, loans and – even though buying a house might not be on your mind at this very moment – mortgages.

In short, maintaining a good credit score will save you money in the long run. It’s never too soon to start thinking about this, because good credit is something that is built up over time. Even if you’ve already dug yourself into a bit of a debt hole, don’t fret. Employing a few disciplined spending and payment habits along with some patience can polish up a lackluster credit score.

What is a credit score?

A company called FICO analyzes an individual’s credit report, plugs all of that information into a formula and then assigns that person a score.

Ranging from 300 to 850, with the higher numbers being the better numbers, a credit score is what banks and credit card companies use to help them decide whether or not to lend someone money. The number also determines how much they lend them and at what interest rate.

Good Credit Can Be As Easy As:

1. Keeping an eye on your credit report by visiting AnnualCreditReport.com, a site that is authorized by the government. It’s possible to get a free copy of your credit report from them once every 12 months.
Study your report for errors and, should any appear, contest them. Legally, credit bureaus must address any mistakes you point out and remove them if they cannot be verified by the creditor.

2. Proving yourself to be “creditworthy” by responsibly making charges and paying them off regularly and on time. The longer the history you have of making on-time payments, the more favorably it will reflect on your credit score.

If you are carrying any debt, make a steady effort towards paying it down. There is a 20% rule of thumb that is useful to bear in mind in those situations – try to keep the amount you owe to less than 20% of your overall credit limit.

3. Not opening and closing accounts at random. It may seem sensible to close accounts if you don’t use them regularly, but this can actually have a negative impact on your credit score. Likewise, each time you apply for a new line of credit your credit score is dinged, so resist the urge to fill out every application that comes your way, no matter how enticing the offer may seem.

The sooner you get yourself a card and start charging, the sooner you start establishing yourself some credit. If you use plastic wisely without allowing yourself to be derailed into racking up loads of debt, you will be on track to a good credit score.

Article published on: Personal Finance 4 All