6 Credit Building Tips for Recent College Grads

6 Credit Building Tips for Recent College Grads

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credit buildingIf you thought finals and homework weighed heavily on your mind while in school just wait until you need to apply for a mortgage, business loan, or car lease. Credit is a simple word that can cause a lot of stress. You need good credit to get a loan, but how exactly do you go from being a ghost to having good credit? These six tips will help with the credit building.

  1. Get a Copy of your Credit Report and Score – You may assume that you have no credit, but this might not be the case. If you have utilities in your name or opted for a payment plan for your new phone with your cellphone provider, you very well may have some credit established. If you have recently applied for credit cards or loans, you will have inquires on your credit, which you want to keep to a minimum. You also want to make sure there are no errors. You would be amazed at the number of people who discover discrepancies on their credit report.
  1. Open a Bank Account – Lenders usually ask if you have a checking and/or savings account because they want to see a pattern of deposits and withdrawals, and to see if you have been overdrawn.
  1. Keep Inquiries to a Minimum – As mentioned, inquires can hurt your credit score. So, the last thing you want to do is apply for credit cards and loans just to see which ones you get. Be selective.
  1. Open a Credit Builder Loan – Many credit unions offer credit builder loans. They are usually under $1,000, but you don’t actually get the money. The funds are placed in an interest bearing account. You make payments as you would any loan and at the end of the term you get the funds and interest. Plus, it has helped your credit.
  1. Choose Credit Cards Wisely – Ideally, you will have one low interest MasterCard or Visa that you always pay more than what you owe on. However, quite often, you have to pay your dues with a credit card to your favorite retailer first. Now, just because you get a new Visa or MasterCard down the road does not mean you should close your retail cards. As long as they don’t have an annual fee, keep them open with a zero to low balance. Part of your credit score is based on how established your open lines of credit are.
  1. Manage Student Loans – There are plenty of options available for paying off student loans. You may even have your loans deferred right now until you get a good paying job. Still make a payment. You want this number to steadily decline.

Too many people say that one of their biggest mistakes they regret was damaging their credit score. If you are a recent grad then you are likely dealing with a clean (at least mostly clean) slate. Take steps to build and maintain your credit. You’ll be grateful you did.

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