5 Effective Ways for Students to Avoid Bad Credit Score

Image Source

Going to university or college is more than just getting an undergraduate degree. It’s also a rite of passage that’s likely to encompass your first experience of living outside your parent’s roof and taking charge of your own finances.

However, the unhealthy combination of student loans, credit card debt, interest-free overdrafts, and even shared dorms could mean that by the time you graduate, your credit scores can be left in tatters.

What gives?

For many students, it’s easy to fall into the trap of overspending and getting it over in their heads. And, those with bad credit scores are often burdened with it throughout adulthood.

To save yourself from floundering into the sea of students with bad credit records, apart from feeding yourself with information on bad credit loans and scores, here are the things you need to do.

Don’t apply for a credit card because just because it has freebies.

Most credit card providers entice college students to sign up for their credit cards in exchange for irresistible freebies and other perks. This often takes place on booths during campus events.

Don’t sacrifice your financial freedom in the future for a free pizza you don’t need, or a T-shirt you’ll never wear! Avoid applying for a credit card on a whim. 

The most sensible thing to do is review your credit card options thoroughly and select the one that works and suits best for you. In this way, you’re protecting yourself against the consequences of recklessly applying for a credit card whose terms aren’t actually favorable for you.

Don’t miss or make late payments.

When you’re too busy with juggling midterms and essays, missing a credit card payment is likely to happen. And late or missed payments have severe consequences.

So how do you save yourself from committing this all-too-common mistake?

It’s pretty simple. Set recurring payment alerts for all your bills, ideally a few days prior to the due date. Many issuers will even set up automatic alerts and payments and then link it to a savings or checking account.

Whenever the payment alert buzzes on your phone, you can automatically check and review your card statement. In this manner, you can track your expenses and look for inconsistencies or any suspicious charges before the automatic payment takes place.

Set a budget.

If you don’t track your finances, chances are, you wouldn’t know if you’re piling up debt than what you can afford and handle. Hence, you need to set a budget and stick with it religiously.

The key here is to learn how to live within or below your means. Compute how much you need to spend every month and spend less. The long-term impact of budgeting and spending wisely on credit scores, credit profiles, financial stability, and overall stress is boundless.

To fabricate your budget plan, start by listing down income every month, including the money you make from your sidelines jobs, if there are, as well as the allowance your parents give. The next thing to do is tally the monthly expenses like school supplies, food, rent, gas, and car insurance. 

You can also write down a goal to keep yourself motivated. 

Don’t grow old with your credit card.

Banks and credit companies love handing out credit cards to students. 

It owes to the fact that young people easily get waylaid in the excitement of freshers’ week, which drives them to spend beyond their means. Also, most people aren’t likely to switch providers. A customer who acquired his/her credit card at 18, may well still be a loyal customer at 70.

But put in mind that lenders have different stances when it comes to credit card usage. Some providers like regular spending, as long as you pay the balances in full, while others want you to make minimum payments because it’s more profitable for them. 

Whatever may be the case, it’s important that you know your limits when it comes to spending.

Look for a part-time job.

If you find yourself putting up expenses on your credit card and living beyond your means, you have to make a decision: spend less or earn more.

If you want to be less reliant on credit and loans and live comfortably, you can look for a part-time job.

All universities and colleges employ students in various facilities and programs. Or, you can find a job working in a retail store, restaurant, local businesses, or even babysitting. Any side hustles will do, so long as it won’t interfere with your class schedules and commitments.

Takeaway

As a college student, you’re probably more eager in last-minute road trips with friends and enjoying a late-night pizza rather than thinking about your financial stability in the future. However, if you start botching up your credit scores in college, it can catch up to you later on. 

Fortunately, you can avoid it. All you need is some know-how and diligence so you can commence life after college with positive credit scores rosy financial health.