Smart Borrower Center
Tools to help you borrow better
Strip away all the extracurriculars, and college at its simplest is all about credit: Go to class, earn enough course credits and in four – or five or six – years you’ll have your degree. College is also a great time to begin building another kind of credit – your credit record – which can help you in your financial life after you graduate. So before you attend your first class, here are 7 credit lessons every college student should learn:
1. Know your worth
In the last several years, credit card companies have hit college campuses in a big way, hoping to hook college students early and gain lifelong customers. Whether you see this practice as predatory or simply prudent, be aware of how much your business is valued.
2. Get a credit card
The length of your credit history accounts for 15 percent of your credit score, so it makes sense to get a credit card now and start building that record. Just be sure to use that credit card wisely.
3. Forgo the freebies
Don’t be tempted by the free T-shirts and stuffed school mascots offered by on-campus credit card marketers. Look for a card with no annual fee and low interest rate – and not just for the first six months. The Internet, http://www.lendingtree.com/stm3/loans/creditcard.asp, can be a great place to start researching.
4. Pay more than the minimum
Your payment history accounts for more than one-third of your credit score, so always pay on time. And if you can’t pay your bill off in full, at least pay more than the minimum required by your credit card company. Merely paying the minimum can quickly land you in a financial hole.
5. Don’t use your credit card as an ATM
There’s no grace period for cash advances from your credit card account, so interest begins accumulating immediately.
6. Protect your privacy
Dorm life may not be the most conducive to personal privacy, but you should take steps to protect your personal financial information. Keep your credit cards and statements in a safe place, and check your credit record once a year, www.annualcreditreport.com, to make sure no one else is opening accounts in your name.
7. Get help
If you can’t make a payment, you can call your credit card company and possibly negotiate an extension. If you find yourself falling deeper into financial trouble look for an on-campus credit counselor, or find a legitimate off-campus one that’s affiliated with the National Foundation for Credit Counseling, www.nfcc.org, or the Association of Independent Consumer Credit Counseling Agencies, www.aiccca.org.