Student Loans aren’t the only way to acquire debit while attending college. Apparently, your college application doubles as a credit app. You are now on a mailing list sent to every creditor in the country and even some abroad.
Credit card companies love college students and will send more applications than you’ll want to fill out. DON’T! They are only trouble. Many people, me included, think - “just for emergencies”. Sorry but that almost never works, unless you are extremely frugal and disciplined, you will inevitably use the card. It may in fact be an emergency. Will you even attempt to find the money without using the card? It is so much easier to reach for the plastic, so much easier to just sign your name. Even if you have an emergency – is it worth 19-24% interest for however long you want to make payment? For me it only took once, similar to breaking a large bill – once broken it is already spent. Once the card is activated it becomes that much easier to use. Some people live on their credit cards during the last few weeks or months of a semester and between. This is simply borrowing from Peter (all be it at a lower interest rate) to pay Paul. Acquiring debt to pay debt only results in more debt – yeah makes sense now. My math skills improved at the expense of my credit score.
Car companies will overrun your mail with rebate checks and pre-approved car loans. These are not quit as easy to get as credit cards but still not as difficult as you might think. A nice, new car would go great with that new life as a grown-up. If your car gets from A-B, at least 75% of the time and it is paid off, keep it. It has been said that you make car repairs or car payments. Unless your repairs are averaging $300-$1000 a month this is a ridiculous rationalization. Car payments plus higher insurance rates equals, that’s right kids, more debt. If the old clunker from high school just can’t see you through a few more years, consider a small bank loan for large repairs or a better/newer, pre-owned vehicle. Smaller payments, a shorter note, and lower interest make this an ideal way of building credit without breaking the budget.
In recent years cell phones have become a part of everyday life. They are convenient reasonably priced but they also require indebtedness. Contracts may offer a slightly lower monthly rate but they also allow for overages and late fees. The truly debt conscious might consider a pay-as-you-go plan a safer option. These plans are available through most cell phone companies and their popularity has resulted in more reasonably priced plans.
If you have incurred some debt try to pay it off as soon as possible. Making extra payments is a great way to lower debt more quickly, while still building credit. Make sure all extra payments are applied to the principal of the debt. Small, consistent monthly overages increase budget manageability and credit scores. They also help to decrease interest and monthly payment amounts.
Maintaining credit is probably more important than building it. If you are already in debt uphold the tenants of your agreement to the best of your ability. Life often makes money management and debt maintenance difficult, sometimes impossible, tasks. If circumstances do not allow for full payment contact the company as soon as possible. Communication with your lenders is extremely important in preserving your credit and your credibility. Preventing default and collections actions keeps repayment options open. If your credit score becomes emaciated from neglect look at the bright side, no credit = no debt.
The bottom line – If you do not have debt keep it that way.
If you are in debt get out as soon as humanly possible.