The one thing that college students rarely think of is a credit score. There are very few students who actually care about that, and some of them don’t even realize that they actually have one. But the scary thing is that the decisions that they make during their time at college can affect their credit rating and hence their entire lives negatively.
Something that should be done immediately is teaching students about the importance of a good credit rating. However, the day that this is done officially is still far far away.
So why is a credit rating important?
Controls your future credit situation
For a college student, there are many factors that affect their ratings. However, the most important factor is usually the ability to repay loans on time. This is usually known as credit history and can actually comprise of more than a quarter of credit score calculations. Unfortunately, this is the factor that most students fall foul off.
Why is this the case? It’s because most students don’t follow up on their financial obligations. When they want to buy something, they get a student loan and then don’t follow up and be certain that all their payments are being made on time. Some people even forget about these obligations!
Why do you need a good credit score?
It’s becoming more and more necessary to get a better credit score. If you want good rates on anything on credit, you need a good score. Of course, there are still businesses like credit catalogues which offer you ‘buy now pay later’ catalogues for people who have bad credit, but they usually have higher rates.
So where is your credit score important?
When you’re renting an apartment. Landlords usually check your credit because they see it as an indicator of responsibility. If you don’t have good credit, you’ll also have to pay a large deposit when buying a cell phone.
Some government jobs also require you to have good credit if they involve a security clearance. High-level jobs in other companies will also require excellent credit ratings.
In fact, your credit score can be of use to you as soon as you graduate. Refinancing your student loans using a private lender is not a bad idea, and you’ll require an excellent credit score if you want to get good rates. If you have a low credit score, it may cost you as much as a hundred dollars a months due to higher rates.
What can I do?
As a college student, the most important thing you can do about your credit score is to follow up regularly and to keep very particular accounts. There are a lot of tools on the internet that can be used for keeping personal finances in order, and students should use them. Simply keeping proper accounts makes it much less likely that you will forget paying important bills.
And there are also numerous tools that can help with credit specifically. Credit Karma is a tool that gives you a free copy of your credit score. It also shows you your entire credit profile and the things that you can do to solve any potential problems. If you don’t want all that information, you can just look for a website that gives you only your report. It would be better for you if you found one operated by the government since that will give you an official report.
If you are a college student, then you need to act immediately to preserve your credit rating. Doing so will prevent a lot of potential problems for you later on in life!