Many high school graduates are about to enter college without a sound education in how to manage their personal finances. To this end, the federal government has recently taken steps to help young people navigate a world filled with complex financial decisions by enacting The 2009 Credit CARD Act. This new law requires that consumers under age 21 now must have a parent or other responsible adult cosign on any credit card account unless they can prove sufficient income to repay the debt.
However, college freshmen can still encounter many financial temptations and it's important to help them avoid early financial missteps that could damage their credit for years to come. A poor credit score can impact their ability to qualify for loans, secure favorable interest and insurance rates or even get a car or an apartment.
Available to offer tips on how college students can improve their financial GPA – credit score – is personal finance expert Jason Alderman. Mr. Alderman directs Visa’s financial education programs, which includes Practical Money Skills for Life (www.practicalmoneyskills.com) and a free credit score education program for college students called What’s My Score (www.whatsmyscore.org).
Below are some tips on how college students can maintain and raise their credit score:
- Pay bills on time: When you have little credit history, a late payment could drop your credit score drastically.
- Extra credit is not always a good thing: Opening several new accounts too rapidly, especially with a short credit history, will lower your score.
- Stick to your budget: Create a realistic budget and stick to it.
- Spend responsibly: Keep in mind that spending more money than you have is an easy way to build up debt.
- Know your score: Much like your GPA would give an employer a snapshot of your overall grades, a FICO credit score gives lenders a fast, objective estimate of your financial risk.