So you’ve just graduated college and are ready to start your professional life. Congrats! Being the responsible go-getter that you are, you’re not only thinking about that first job and apartment, you’re also ready to start building your credit score. A few of your peers are stressing out over their fledgling credit scores, while the majority couldn’t seem to care less. Not you, though! Whether you opened your first credit account prior to graduation or you’re just getting started now, you are going to follow the guidelines below and take charge of your financial future.
First things first: find out what your credit score is, and keep checking in. A couple times a year would be good. By making direct requests to the credit bureaus, you can get your information for free without impacting your credit score. Make sure there are no errors or fraudulent activity sabotaging your efforts to build your score.
Now you’re ready to get into the credit game to make it easier to get a car, land a job (some places actually check your credit score!), and buy a house. The key is to get started off on a path of consistency and responsibility, because just like trust in a relationship, a good credit score takes a lot of time and effort to build and just a small amount of carelessness to destroy. It may be tempting to go out and buy everything you want once you start getting those fat paychecks, but it is critical that you carefully manage your income and expenditures, do your homework before taking on new credit, and most importantly, pay your bills on time!
The majority of college graduates will have taken out student loans to complete their degree, and those repayments will typically kick in shortly after graduation. It is extremely important that you never ever miss a payment! Consolidating loans can be helpful so that you only have to make one (often monthly) payment instead of paying each loan individually. Auto-draft options can also be useful if you have consistent income.
If you are still looking to land that first job and/or you are finding that your regular payment is too high, work with your lenders to either lower payment amounts or explore forbearance or deferment options to give you some breathing room. Remember, though, that credit bureaus and prospective lenders all want to see that you are willing and able to repay your loans, so the faster you can pay off those student debts, the better.
When it comes to credit cards, there is a catch-22 for many young graduates in that they want to use a credit card to build their credit score, but with a limited credit history, they are often denied by big-name credit cards. Many new credit-seekers find it easier to obtain a retail credit card, which can work great as long as that retailer reports straight to the credit bureaus (if it doesn’t, then you can’t build your credit score). If you do opt for a retail card, be sure to read up on all of the details; the perks and rewards thrown your way may pale in comparison to the interest rates after the introductory period ends. In any event, always pay your bills on time, and don’t apply for too many credit cards in too short a time or your score will take a hit.
Building your credit score can seem like a confusing and frankly unnecessary use of your time and efforts. However, if you check your credit report regularly, manage your debts, pay your bills on time, and live within your means, you will be on your way to building a strong credit score for the future that will allow you to live the life you want.