The Importance of Establishing and Maintaining Good Credit During College

Establishing and maintaining good credit is a process and an outcome you can initiate during your college years. The availability of credit provides you with access to necessities and opportunities. It increases your independence and raises you in the esteem of people and institutions that will matter in your future. The fruits of having good credit are a stable and rewarding financial life after graduation.

Independence

As a college age adult, beginning to create good credit is an aspect of life you can control. Your credit can be completely your own, a positive act of independence. You can hold a single major credit card and request a low limit that does not tempt you to overspend. You can shy away from cash advances, knowing that credit institutions usually charge more for them than they charge for purchases. You can avoid co-signing for anyone else on a major purchase such as a car, knowing that if the person for whom you co-signed defaults on the loan, you are obligated for the outstanding balance. You can monitor your own credit and review credit reports once a year, knowing that only you can challenge false negative information and make sure it is removed.

Preparation for Future Financial Life

Credit can be a valuable element in a mix of financial tools. As a student, you may have savings from earnings or gifts, savings you manage and only diminish in times of unusual need. You may have a checking account with a debit card for access. Restraining from overdrawing a debit account and keeping some cash on hand is another financial management technique that leads to good credit. By keeping a watchful eye on how much you have on hand, how much credit you apply to, how much you can back and how quickly you can pay it in full, you establish patterns of behavior that can guide you toward a satisfying financial life.

Help Land a Job and Place to Live

Having good credit can boost your employment prospects. Prospective employers are likely to review the credit history of job applicants as a part of their routine screening before offering employment. Your established willingness and commitment to honor debt obligations provides a gauge for the employer on your personal integrity. Landlords, too, may ask for information from potential renters and check their credit. Your good credit report indicates that you are likely to pay rent reliably, and it may also serve as a different indicator. The self respect and attention to detail required to maintain good credit may indicate to the landlord that you will be a good candidate to take proper care of his valuable property.

Gain Financial Advantages

Established good credit offers yet another advantage. People who have good credit are often the recipients of preferred-loan interest rates and preferred rates on their automobile and home insurance. Conversely, people with poor credit have difficulty qualifying or are unable to qualify for loans. When they do receive a loan, they are very likely to pay a higher annual percentage rate on their loan contract. In effect, bad credit costs them money, the freedom to bargain for the most advantageous deal can cost them their freedom of choice.