You want to have good credit before you need to have good credit. However, many Pennsylvania college students have bad credit habits that keep their credit scores low. Without a real job, many students think they are powerless to improve their credit. The reality is that there are a few steps students can take to improve their credit.
- Think twice about school loans.
- Use credit cards wisely.
- Pay your bills on time.
- Pay down debt if you have it.
- Know your credit score.
- Check your credit report.
School loans can be very tempting, and many students look at them as free money. However, avoid the temptation to take loans for more than your educational expenses. While school loans might not tank your credit score now, once you have to begin repayment, it can be easy to default on them.
Like school loans, credit cards can seem like free money. It is easy to spend too much when you are not using cash. Maxed out cards or even carrying more than 30% of your income in debt, which is easy when you are a poor student, can negatively impact your credit score. On the other hand, paying for everything in cash means you are not building credit. Use your credit cards like you would use a debit card; to make purchases you can afford to pay for when you buy them.
Make sure and pay your bills on or before their due date. Many college students are handling their own bills for the first time. Even if you pay your bills in full, late payments can ding your credit score. Schedule automatic payments to ensure they are paid on time.
If you have gotten yourself into debt, stop spending! What can you do to pay down debt now, before it gets overwhelming? This may mean picking up a gig or part-time job to pay your bills, but compound interest means debt can go from bothersome to overwhelming in a hurry.
Check your credit score. You are entitled to one free credit report each year from each of the credit reporting bureaus. Knowing your score is the first key to building good credit. Is your score lower than you think it should be? Check your credit report to find out why. Make sure that all of the information on your report is accurate; mistakes on credit reports are common and can negatively impact your credit score.