Being a college graduate nowadays is becoming somewhat confusing. You were told as a child that you need to go to college to get a great job. So you did. But now you realize that going to college also means the burden of unwanted debt, which is problematic when you’re just starting your career. So building good credit is a must during these early years. If you, or your child, just graduated college, here is some useful information on how to build credit after getting a degree that will help you buy a home one day.
Step 1: Find Out Where You Start
It’s important to know where you are, and how many loans you took out for school determines your credit score. You can take a look at free credit sites, but a great site to use is Annual Credit Report. Since it is backed by federal law, you are allowed to receive your credit score information for free without any payments. However, you can only check your score for free on this site once every year.
Step 2: Credit Cards
If you want to make big purchases in your life—like buying a car, having a mortgage, renting a home, and even certain careers—you’re going to need a good credit score. So talk to your bank and look at different credit card options online to see what works best for you. You’ll find a credit card that suits your specific needs and wants that you can rely on . . . just remember not to overspend!
Step 3: Look Over Your Student Loans
You should look over the student loans you have taken out. On occasion, there is an error on your credit report because of loans and/or other complications. If there is something that you believe is a mistake listed on your credit report, contact the consumer financial protection bureau to help you with any disputes or complaints you may have about your credit score. They will help you understand what you see on your credit report and work with you on any fraudulent activity that may have occurred. Always remember to pay your student loans monthly and on time. This will ensure that you are paying back what you’ve borrowed, and your credit score will positively reflect this.
Step 4: Monitor Your Spending
Building your credit means monitoring what you spend your money on. You should never get a credit card just to use it for frivolous items. This can be detrimental to your credit score if you love to shop or make purchases out of wants instead of necessities. The way you should go about using a credit card is for everyday items. A good rule to follow is to only use 30% of your monthly limit and pay your card’s balance off every month. This way, you’ll be monitoring your spending and keeping a great credit score!
How to Repair Your Credit
If you’ve looked over your credit, and it is not what you’d like it to be, there are some ways you can always repair your credit score. Start paying all of your bills on time if you haven’t been and always monitor your spending if you decide to open a new line of credit. Do not close any existing lines of credit because this is only going to negatively affect your credit score. Remember that you can always transfer any existing debt onto a higher-limit credit card to help lower your monthly payments. By taking the first steps to repairing your credit score, you are on the right track to becoming free of debt and constantly paying interest on your purchases every month.
Building your credit during and after college is the best thing you can do for your financial future. Having good credit is what everyone strives for financially, and it will allow you to worry less about money, which gives you more time to find the perfect career with your expensive education! As long as you remember to be smart with your credit purchases, and you pay off your balances monthly, you will have a strong credit score that will allow you to buy a home, car, and any other major purchases you will want in your life.