Congratulations, you’ve earned your degree. You can finally wave goodbye to all-night study sessions and anxiety-inducing exams. However, tearful celebrations are quickly tamed by the realization that adulthood has finally arrived.
Equally empowering and frightening, with maturity comes real-world struggles and financial strain. In most cases, recent graduates in their post-college era scramble to find high-paying opportunities in their field. That way, they can afford astronomical rent costs and establish retirement funds for their long-term financial well-being.
Unfortunately, as young adults work on polishing their financial pictures, they often fail to realize the importance of credit. Because building a healthy financial reputation is difficult with surmounting student loan debt, reaching your financial goals might seem lightyears outside the realm of possibility.
However, if paid regularly and managed responsibly, loans can positively impact your credit score— but even one missed payment can bring down a perfect score by up to 110 points. If graduates are more than 100 days late on a payment, they fall into default status, resulting in collection lawsuits and enduring damage to credit.
The significance of credit will impact every aspect of your adult life. A good credit score provides you with a lowered interest rate on student debt or future car loans. Prospective employers will diligently comb through your credit score to determine your reliability. Credit score even affects where you can live, as landlords perform routine credit checks. Regularly checking, improving, and maintaining an excellent financial standing allows you to live comfortably throughout your adult years.
Rest assured that having less than desirable credit isn’t the end of the world. With this fool-proof guide, you can build your financial reputation and become a more fiscally-sound college graduate.
Apply for a Credit Card
Using and paying off a credit card is the easiest way to build your financial standing. By keeping utilization at or around 30% every month and making payments on time, you can steadily improve your score.
Have you found yourself lost in the credit-building universe’s maze? Recent graduates can easily apply for starter cards like the First Financial Bank credit card. With flexible payment plans and adjustable credit limits, starter cards help students build credit with ease.
Become an Authorized User
Your parents have already established a solid credit score, and becoming an authorized user on one of their cards can give you a financial edge. As an authorized user, you’ll become the secondary account holder. Although, it’s still the primary user’s responsibility to make payments. While dependable payment history and longstanding status will lift your credit report, be mindful of instances when the primary holder makes late payments that can drag you down.
Get a Credit-Builder Loan
Builder loans can improve your score faster than a traditional credit card and are often more forgiving. Unlike a conventional loan, a lender puts a balance into a savings account that you can’t access until paid off.
The amount is relatively low, usually between $300 to $1,000. Over a set period, you’ll make regular payments that build a positive credit history. Once paid in full, you’ll gain access to the money. Credit-builder loans allow you to enhance your score while nourishing your savings account.
Get Credit for Every Payment
You can improve your score even without the use of credit cards or loans. If you have a good reputation for making on-time payments to utility companies, cell phone providers, and landlords, ask them to report your payments to credit bureaus. Equifax, TransUnion, and Experian will take these reports as a sign of responsible financial management and bump up your credit score.
Good Credit, Good Living
A healthy credit score determines the well-being of your financial future. By applying for graduate-friendly credit cards and lender loans, you can steadily build your reputation. Above all else, you should regularly check your credit score. You might be surprised to see how quickly it grows.