It’s easy to throw down your MasterCard and forget about how much your text books cost for the semester; it’s just as simple to open a tab at Happy Hour and let the Bud Light flow. We all eventually realize, however, that college flies by in the blink of an eye, and before you know it, you’ll be on your own.
With the economy in peril, now is an especially good time to start keeping an eye on your credit score so you don’t find yourself denied when you try to open new bank accounts, get a new apartment, condo, or house, or reward yourself for landing your dream job by buying your first brand new car. Maintaining a good credit score doesn’t have to be harder than next Tuesday’s cumulative Calc exam, though– here are five simple steps to stay on top of your financial game.
1. Get a credit card.
This might seem like a no-brainer, but I know a lot of people who are adamantly opposed to credit cards. How they live without them, I don’t know. Personally, I am always prepared to whip one out in case of an emergency (like when my gas tank is below empty and I try my luck at the commuter lot at school). Hey, if you can get by without a credit card, you win my admiration, but you can’t build credit if you never have any to begin with. Get a credit card, and charge a couple small things each month- paying your bill in its entirety will show how well you handle your money.
2. Put your name on the bills.
It’s a luxury to have parents who help you out in college. However, if the ‘rents pay your cell phone bill, sign for your campus housing, or let you drive their car around for four years of higher education, you won’t have very strong credit references when it’s time to get out on your own. Many apartment complexes want to see that you’ve been a good, rent-paying tenant in the past, for example. If you only have your parents’ credit to go by, they might have to co-sign for you as gauranteurs, which still doesn’t necessarily prove how responsible you are when it comes to managing bills and paying off debts. Even if you start small, like keeping a cell phone plan in your name, you’ll be off to a good start.
3. Pay what you can..and pay on time.
Not paying your CC bill will result in a hefty fine, as will paying your rent or other bills by the due date. If you find yourself struggling at the end of the month, prioritize your debts. Pay the car payment in its entirety, and send American Express the $20 minimum payment. Don’t squeak by with small payments every month, though – as far as credit cards go, your score is measured in a ratio of debt vs. available funds. Paying the min will result in a finance charge, which could make your balance stagnant (providing you aren’t spending more each month). So if your credit card limit is $5,000, and your balance has been a steady $4,500 for the past few months, your score will take a hit.
4. Keep old accounts open.
Remember the time you signed up for a card because you wanted a free T-shirt, and then realized you didn’t need a third credit card? Keeping that account open will actually look good on your credit report. If you don’t have to pay a fee to keep it, it won’t hurt anyway. However, if you continually max out your cards, transfer your funds to a new card, and close the first account, your spending will look sporadic and unorganized. Really, you can avoid this altogether by finding one or two really good credit card deals that you can use for years, but if you’ve paid off your debts on one card and really want the Delta Skymiles Platinum so you can earn enough rewards to fly to Hawaii this summer, there’s no reason to reach for the scissors just yet.
5. Keep an eye on your credit score.
This way, there won’t be any surprises. If you see your score start to slip, you’ll be aware and can re-anaylze your spending and try to get those numbers back into good standing. You’ll also be able to monitor your activity and prevent fraud, identity theft, or unwarranted charges. Check out FreeCreditReport.com or speak to a financial expert to figure out where you stand right now.
Getting into these simple habits won’t just help you establish a good credit report while you’re still young, but you’ll start to develop healthier spending habits to keep your credit shining as you begin your real adult life of mortgages, car payments, and starting a family. Really, these things should come naturally, but are overlooked by millions of people, young and old, across the country.
And hey, it’s quicker than checking a Facebook minifeed, so what are you waiting for? Fill out your first credit card application, check your payment due dates, and try to get an idea of where you stand in the realm of debt and credit.