After you have earned the credits you need to earn your degree, a new form of credit becomes important. This type of credit will affect you for the rest of your life; it will affect your ability to get certain goods and services before paying for them with the expectation that you will make the payment in the future.
You may already have some experience with credit, especially if you had a cell phone or utility bills or a credit card. But, when you build a life without leaving your parents and away from the college campus, building and protecting your credit becomes much more important.
Building Your Credit After You Graduate College
1. If you have not yet set a credit history
You may find it difficult to rent an apartment, buy a house or a car, or even a credit card. The Catch-42 of credit is that you need credit to get credit, but you can’t get credit if you don’t have credit. A good job, a higher down payment, or willing cosigners can help you jumpstart your life and start building a solid credit history.
2. Student loan payments will start in six months for most types of student loans
If you are not going to pay – or make payment arrangements – your credit will be hurt. You get a grace period after graduation to find a job and get settled for your student loan payments to kick in. Make sure your lenders have your correct address so that your statements will reach you. Try to get an idea of what your payments will be before you have to start making them so that your guard will not be caught out by the amount to be paid. Talk to your banker about the repayment options that match your income and expenses.
3. Opening too many credit cards at once is risky
Sticking to only one or two until you get used to your new job and new living costs. Being approved for your first credit card can be exciting, but don’t get addicted to the feeling. Credit cards come with the risk of debt. If you are just starting out as a young adult in the real world, you don’t need to add credit card issues to your list of things to handle.
4. Payment due dates are non-negotiable and missing an due date can hurt your credit score
Your professors need to get the magazines running now and again in a day or two without being fined, but your creditors are not that friendly. You can set some payment dates to change a better time in the month, but not as a payment avoidance tactic. Get used to paying your bills on time because missing them comes with expensive fines.
5. You have access to a free credit report once a year
Order it annually to keep track of what’s going on in your credit life. Your credit report contains a list of all your credit account. It is what creditors, lenders and other companies use to decide whether to approve your applications. Visit annualcreditreport.com to get access to a credit report from each of the three major credit bureaus every year. Check your credit report to check if the information on this is correct and complete. Dispute errors with the credit bureau.
6. Bills your roommate doesn’t pay can hurt your credit score
The number that measures your credit history. If you live with a roommate, make sure any rent and other bills that have your name on them are paid on time every month. The companies will not care that you and your roommate have an oral (or written) agreement to split the bill. They care about getting paid on time by the name who is on the bill.
7. Putting your credit on the line for someone else is not smart
If you already have good credit, think twice about co-signing for a friend, family member, or romantic partner. If you have his signature for someone, you are essentially promising that the payments will be made every month, even if that means you have to make them. When the other person misses payments, it affects your credit, too. Non-payments can destroy your credit, making it difficult for you when you need to borrow money for yourself. Keep this in mind even if you have asked a parent or friend to sign something with you.
8. Everything you do now affects your credit for the coming years
Make wise decisions and you will be rewarded with a good credit score. Similarly, poor decisions and credit errors will lead to a poor credit score. Negative information remains on your credit for seven years. If you make a credit mistake at the age of 22, it will stay on your credit report until the age of 29. When you get a mortgage or buy a new car, the mistakes you made years ago could affect you. Fortunately, there is no limit to the amount of time that positive information stays on your credit report. Aim to keep your credit clean so that you are not in trouble on the road.