Understanding, Establishing and Maintaining Credit

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Spring break has come and gone and as with many other college students, you may find that in its wake, you’re afraid to check your finances — especially your credit card statements. From overspending on lodging to using your card for restaurant visits and nights out, there are a number of common vacation spending practices that could have a negative impact on your credit this year. Luckily, there are a few steps you can take to get your credit on track.

1) Check your credit report. Find out what’s on your credit report by obtaining it from one of the major credit bureaus (Experian, TransUnion, and EquiFax). It will include the information used to determine your credit score, such as: the length of your credit history, types of credit in use, new lines of credit, past credit history, and amount owed. You may also obtain your actual credit score from these providers, but you will likely have to pay for this service.

2) Avoid behaviors that will lower your score. Once you’ve seen your credit report, try making a list of each line of credit and loan and include the interest rate, spending limit, remaining balance, and payment due date. From there, you can prevent engaging in behaviors that will lower your score, such as making late payments, maxing out your credit cards, opening multiple accounts in a short period of time, closing accounts with a long-time history, and lowering credit limits on existing revolving credit lines.

3) Make a plan. To improve your score, make a plan for how you will pay down your credit cards. This could be each week, each paycheck, or each month, but keep your interest rates in mind to reduce the total interest you’ll pay over the course of
the loan.

You may also want to consider what sorts of products or services you plan to pay for with your credit card. By adopting specific spending practices from the beginning, you can prevent yourself from making impulse purchases and buying more items on credit than you
initially planned.

When it comes down to it, the best thing you can do for your credit is to be responsible. By understanding what impacts your credit score and engaging in best practices to establish or maintain it, you will have the tools needed to make good decisions and set yourself up for a successful financial future.

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