As college girls, being independent financially has been a sought after goal since we first declared a major and made career goals for ourselves. Sure, we have four years to wind our way through the college system to earn our degrees, but it’s never too early to learn about ways to navigate the ups and downs of financial independence – starting with your credit score. How does having a good credit score help you in the future? When you are looking to make a big purchase, like a house or a car after college, having a good credit score is imperative.
First, you need a little plastic. Contrary to popular belief, having credit cards can actually boost the quality of your credit score. To have credit history, you first need credit. To maneuver this safely, apply for a credit card program with low interest with no annual fee to start building your credit. As long as you’re responsible, you can raise your credit this way.
Make payments periodically. Another great way to improve your credit score is to make payments periodically as opposed to making the minimum payment or one large payment. By making simple and small payments throughout the month, if your credit card company allows it, your balance will become more manageable.
Opt for cash whenever you can. While it can be tempting to pull out your card and go after making a purchase, try to stop and use cash whenever you make a small purchase. By using your credit card sparingly, you protect your balance for when you need to make bigger purchases – if you have a low balance but make a bigger purchase, it is recorded on your month’s balance and can negatively impact your overall credit score.
Widen the gap between your debt and credit limit. To help your credit score, pay it forward – pay down or pay off your debt. Credit bureaus ideally want to see a wide gap between your amount of debt and your total credit limit. In short, aim to decrease your debt, maintain low balances every month, and pay on time.
Use self discipline. The practice of restraint is a big factor in getting a good credit score. A lot of your favorite department stores offer their own cards (Victoria’s Secret Angels Card, anyone?) but opening accounts that you do not necessarily need can hurt you in the long run. Having new accounts lowers the average account age you have, which can look to credit bureaus as if you open a bunch of new accounts often, which lowers your overall credit score.
What do you think?
Do you know your credit score? Did you find this article helpful? Let us know in the comments section below!