Along with the increasing panic about impending exams, college graduates have the additional weight on their shoulders of thinking about what they'll do after graduation. For most graduates, that means finding a job and a place to live.
It's a new stage in life, which means there are many unknowns and a lot of learning (but this time, it's not classroom-style learning). If you are a new graduate, you are setting up your life -- which doesn't just include a job and a place to live but also a credit history. The credit history you establish today is something you can build on (and rely on!) for years to come.
Learn from these four all-too-common credit mistakes that other graduates make and avoid them so that you establish the best credit history possible.
New Graduate Mistake #1: Maxing out a credit card. A credit card is an essential part of your finances -- perhaps just as valuable as insurance and a retirement fund. A credit card not only helps you to buy things that you might not be able to save up for, but it also helps build a credit history for you. Unfortunately, many graduates go from being penniless students to suddenly having access to thousands of dollars of credit and they spend it. This is an expensive decision that has haunted many graduates for years after college. It's good to get a credit card but use it carefully, and try to use only as much as you can pay off immediately.
New Graduate Mistake #2: Skipping the credit card. While some graduates melt their credit cards from overuse, others go the opposite direction and avoid credit cards like the plague -- afraid that they will take on a bad credit habit. However, credit cards are extremely useful (for airline tickets, car rentals, and online purchases). Plus, good credit card habits can build good credit history, which can lead to higher credit scores. So get that credit card and use it regularly... But use it wisely!
New Graduate Mistake #3: Moving around a lot. For many students, college is a transient time -- you're living at home during the summer and at school during the semester, and you might have a different address every school year. It's perfectly understandable in college but this transience can carry over to graduates as well, and they may end up at their parent's home, staying at a friend's house, and renting here or there, depending on the job. However, make sure your mail follows you. You do not want to miss a bill and get a late payment on your credit report. Confirm all your accounts have your new address.
New Graduate Mistake #4: Never checking credit reports. This stage of life is a busy one! Graduates enjoy an active social life and a busy start to their career journey. They just got out of school and the last thing they want to do is more studying! Yet, if they ignore their credit reports, they risk remaining unaware of what items are impacting their credit -- from overdue debts to identity theft. A great investment of time and attention is for new graduates to pull their credit reports, review the information listed for accuracy, and take action to correct or improve the information listed in their reports.
This is an exciting time of life for new graduates, but the learning isn't over. The education you started in school is now extended to a real life education and one important class is "Credit." The credit habits and history you develop now can help you -- or they can hinder you -- for the rest of your life. Learn from these lessons and start this stage of your life on the best foundation!
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