Why Credit Should Be a Concern for College Students

There have been many concerns about the lack of personal finance education in American high schools and colleges. As a result of the educational system not properly teaching even the basic aspects of personal finance, many college students are graduating from universities around the nation in deep debt and carrying low credit scores.

Leaving college with even the best of degrees may not be enough to allow you to establish a reasonable lifestyle. Today, a credit score carries a lot of weight in ‘real life’ and without a solid credit profile it will prove difficult to secure financing necessary for a home mortgage. In addition to the loan troubles, a low credit score may also hamper one’s ability to rent an apartment or secure a job. Landlords and employers are both using consumer credit scores to make rental and employment decisions.

Start Off On the Right Foot.

College is the best time to start a solid financial foundation. However, due to lack of experience and education, many students leave college with huge debts and no secured career. Credit card debt is a common occurrence among the younger generation who has not be taught how credit actually works. Because not all college students can afford to work and attend school, they often rely on credit cards for food, clothing and transportation expenses.

College students are actually in a position to create a strong credit profile early on if they handle their financial affairs correctly. Establishing a credit profile at the age of 21, allows for a lengthy credit history in the long-term. The length of a person’s credit history accounts for a large percentage of their credit score calculation. By establishing a profile early in life and maintaining good credit, a college student can position their future financially.

Building a Financially Sound Future.

As a student in college, it may be hard to consider how what you do now can drastically affect your financial future. But once out of college, many students are already burdened by student loan debt and credit card balances. By making late payments or missing payments altogether on these financial obligations during or after college, credit scores are sure to drop.

With a low credit score, a recent graduate will have a hard time getting any kind of credit especially when it comes to a mortgage. With the current state of the housing market, it is even more important for consumers to have top-notch credit scores if they are looking to get approved for a low-interest mortgage. As likely the biggest investment a person makes in their financial life, a home loan is one of the most important of all financial decisions. In order to get approved for an affordable loan, a decent credit profile must be established early on and maintained for years to come, long after graduation has occurred.

Building a Smart Credit Score.

As a college student, it is advisable to start slow with credit. Applying for a student credit card at the age of 21 and using it wisely by making small purchases and paying balances in full, a student can build a successful credit record early on. Moving forward, all financial obligations must be paid on time as per agreements with creditors in order to continue strengthening one’s credit profile. Regular checks into a consumer’s credit report and score will further aid in protecting one’s credit and continuing to build a solid financial future.

The college years can make the real world seem so far away but financial responsibility starts early and is a necessity for the lifetime ahead of you.

Ed O’Brien is a seasoned writer in personal finance, specializing in credit repair. You can find more of his articles located at CreditRepair.org.

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