More than ever, good credit has a vital role in your financial sustainability. This is why you should start thinking about it even if you are still a student. For this article, we take a look at how students can build good credit.
Get a mortgage
Ask any decent financial advisor, and they will tell you the various benefits taking a mortgage has on your credit. A home loan is generally regarded as “good” debt because it comes with a physical asset. Your credit score may dip a bit for the first few months after taking the loan, but it will increase dramatically later on if you pay on time. By getting a home loan from a reputable mortgage broker in Tempe, you will have a significant advantage. It adds a lot of positive points in your favor in the credit history.
Urge your parents to make you an authorized user on their account
Unless you are confident enough in your ability to not spend your money on senseless things, it may be smart for you to have a credit card under your parent’s account. It helps you build good credit without the financial risks that come with having your own credit card so early.
This practice is normally called “piggybacking” and is encouraged by some banking institutions. This way, at least, your parents will be able to monitor spending while boosting your own credit.
Pay your bills on time
You need always to pay your bills on time as a late payment can have devastating consequences on your credit. This is especially true with your credit card payments. Set a payment schedule with your credit card through auto-deduction, if possible.
You should also remember that the other important bills like utilities and rent may also affect your credit. Credit bureaus are also looking at your taxes and library fees too so you should pay off these bills early as well.
Pay off balance regularly
If you are still trying to build credit, it is best if you do not carry a balance in your credit card. As much as possible, you should only use your card on expenses that you can afford to pay off at the end of the month. Otherwise, you are already living a lifestyle that may prove to be too costly for you.
You should make it your commitment to yourself to avoid living beyond your means so that you will not have problems with your credit later.
Avoid taking student loans
If you can afford to go to college without having to take out a student loan, that would be best. A student loan is a big nightmare for many college graduates because paying for it can go on until their late 30s. If you have to, only get a student loan to sustain your studies and the additional living expenses that come with it.
Try to ignore the temptation to spend it on other things like a car or anything unrelated to your education.
Taking your own mortgage, refusing to get a student loan, and regular credit card payments are fantastic options for students who want to build good credit. With good credit, you will have less financial limitations.