Back To School For College Students
Do you remember what you did with the last credit card you closed out or cancelled?
- Be aware of your surroundings at all times
- Don’t skip class
- Get involved/meet new people
- Have fun, but not too much fun
College orientation can be a whirlwind and there are so many things that happen very quickly prior to the first day of classes. It is no longer as easy as grabbing the list at Walmart for school supplies and heading off for your first day.
I can recall my mother and I signing up for a checking account at a bank that was local in the town my University was at. I was extremely excited to start school and was ready for all these new responsibilities.
With that being said, there were also some things I didn’t know about as an 18 year old out on their on my own. I was not aware of what all went into good credit scores.
Here are five tips to educate your college age student when it comes to credit:
1. The Reality
As a student you may not know what shows on your credit reports. Student loans are just one of the items that may end up on your credit report.
Other things that may show up on your report in a negative way can be
- late payments on utilities
- a landlord that you or a roommate doesn’t pay with the lease and fines
- retail credit cards
- late payments on a student loan
If your student is making payments on their loan themselves, stress to them that late payments are very serious when it comes to their credit. The same goes for any kind of credit card or bill.
A late payment on a credit report can drop a score up to 100 points. Rebuilding credit can take a while and although it may not seem to be a big deal to a student currently, good credit is important and should be emphasized to your student.
2. Find The Right Fit For You
If there is an absolute need for a credit card as a student, you want to be sure to do all research before taking the next step and signing up.
When you are looking into applying for a credit card remember these few rules
- Shop for low rates
- Try a credit union
- If you apply for a checking or savings account with a bank, look into credit card options with them as well
3. How To Use The Cards You Get
A credit card should only be for emergency use or to build credit. Students should keep credit card balances as low as possible. If they are using the credit card, try to keep the balance below 30% of the limit.
Credit card balances are reported to the credit bureaus each month. Your credit score will reflect lower scores, if your balances are very high or are reaching maxed out or close to the limit.
4. Building Credit
If your student is using credit cards, encourage them to monitor their credit.
The myth out there about having to keep a balance on your credit cards is not accurate. Remind your student as well, that most of the credit cards will be acquiring interest.
There are many companies out there that will offer credit reports for free or you can enroll in credit monitoring.
When pulling a credit report, take note that any consumer score that you can view online is a vantage score not an actual FICO score. Vantage scores tend to be higher than what an actual FICO is. FICO scores can only be given to you by a bank or lender. However, monitoring your credit at this time is more about what is showing on the report and the timely payments, etc on the report rather than the bureau scores.
5. Put A Lid On It
In an era where it seems there are so many awesome things going on whether you are on Facebook or Instagram, it can be hard to miss out on fun opportunities that maybe you just cannot afford.
Although your student may want to take that awesome Spring Break trip with friends or they have a hard time without the newest clothes, continue to help guide them and help them understand the importance of making good financial decisions.
How Can My Student Start Building Credit?
- Become an authorized user on family member card
- Look into a credit builder loan
- Apply for a secured credit card
There will be many important life lessons that happen through this next time period in their lives. As parents it is important we both teach and model good decisions and long lasting lessons. We hope this sparks a conversation in your household about good financial choices for your high school graduate or soon to be graduate.
Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.
A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.
Article by Breana Washington
Check out Credit Law Center’s info-graphic on 4 myths of collections reporting on credit reports.