Establish a Credit History
Most financial advisers suggest that undergraduate students start establishing a credit history while still enrolled. Getting a credit card is a popular way to establish credit and there are good reasons to do so. But there are also serious pitfalls.
Benefits of using a credit card:
“A bank is a place that will lend you money if you can prove that you don’t need it.”
- Convenient way to purchase necessities
- Safe way to avoid carrying too much cash
- Making on-time monthly payments can help establish credit
Hazards of using a credit card:
- Easy to impulse shop and over spend
- Carrying a balance can hurt your credit score
- Paying only minimum payments can hurt your credit score
- Charging up to the credit limit can hurt your credit score
Establishing a good credit history while in college makes it easier to access credit after graduation for major expenditures such as renting an apartment, buying a car, buying a home, etc. Be vigilant in budgeting monthly expenses while you are still in college so you can control what you spend and make your credit card payments on time.