A while ago I posted up an article on sharenotes.com prompting my fellow students to avoid plastic as a means of avoiding getting yourself into debt. What I realized later is that my article failed to touch on the subject of establishing credit in the first place.
Credit cards are a necessary evil in this world and although I would prefer not to use them at all, doing so responsibly can really help out in the long run. Maintaining a healthy credit score can help a person buy a car, property, or even get hired on a certain places. It’s certainly helpful with renting apartments and houses which most of us have gone through. Having bad or no credit can cause the landlord to require a massive deposit or flatly deny you… So long condo in Pacific Beach!
So yes, avoid plastic if and when you can. Don’t run up massive balances because those can stay with you for a lifetime. If you get 1 or maybe 2 cards and use them moderately, pay your balance etc.. you will build credit and not debt. There is a difference.
When I started out I got a card through my bank which made it easier for me to obtain. While it may seem like there are tons of credit cards available to students (walk around campus sometime and see the offers everywhere). The truth is it’s not hard to get credit it’s just hard to get a GOOD credit card.
That’s why getting your first card through your bank may make it easier to get a card with a decent rate. Yes I know the card offers on campus will also get you a free frisbee but read the fine print,.. see that rate!! Yeah. Run.
If you are having trouble getting approved for a “grown up” card through your bank, they also offer secured cards. These cards require a deposit that is enough to cover the most you can charge up (read: low risk), but they are a good way to establish (or re establish) credit. With modest limits and the security deposit it forces you to use it to build credit vs. running up the debt because it’s easy.
So now you have a card, what do you use it for? Well remember you’re only doing this to build credit, not to buy a bad ass stereo, so you buy things you would otherwise being paying for in cash. Use your card and then use the cash to pay off your balances. This way you’re not paying interest on your monthly needs and you’re building credit by using your card responsibly.
I’d be lying if i said the lure of easy credit never pulled me in. I’m know I’m not the only one on sharenotes.com that’s been snared by it. But little slip ups aside, it’s important to stay out of major debt, especially in this economy. Jobs, even with a degree are no guarantee.
Once you’re established with a card, you can move on to a car (one you can afford!) and then eventually a home. In the meantime renting should be a breeze and getting that post grad job you’ve always wanted wont be hindered by a poor credit history.
, by getting you to post your lecture notes to share with your classmates!