5 Tips for fresh graduates on building up the credit scores
In the recent economic downturn, since fresh graduates are not getting a desirable job or salary hike, they are not being able to pay for debt after meeting their household expenses. Thus, these students are falling more into debt and accruing bad credit score. According to the Wall Street Journal, an unreleased educational report, around 49 percent students graduated between 2009 and 2011 have bad credit score. Bad credit score can cripple the life of the students by not being allowed to get a new credit, insurance, or any kind of lease. Students with bad credit score are also not allowed to apply for a new job. Hence, it is very important for all the fresh graduates to rebuild their score as soon as possible. Following a few important tips given below can help the students rebuild their credit score.
Obtain an unsecured card:
One of the great ways to rebuild credit score is to obtain a new credit. Since you have poor credit score, you may not qualify for an unsecured credit card, but a secured one is always an option. Secured credit card is a kind of card needs to be backed up by collateral against the credit limit available on the card. Usually the credit limit available on this type of card is low, but it may get increased if students show responsible attitude towards the card. However, the benefit of using this kind of card is that in the event you should default on the card, your bills will be paid by the collateral available against the credit limit. Thus, this card will never let you accrue overwhelming credit card bills and fall into credit card debt and thus, will help you refurbish the credit score
Use the card for small purchases:
Once you get your secured credit card, start using it. But make sure you use it in prudent ways so that you do not default on the bills. Use the card within limit and avoid purchasing unnecessary goods with it so as to keep the balance low, which will help you refurbish the credit score.
Avoid big-tickets except when in e credit score emergency:
Remember, credit card is a tool which is to be used primarily in case of emergency. Keeping the debt levels low on your card will ensure that you have plenty of credit lines available on the card during emergency. This way you can use your card without exceeding the credit limit and incurring bad score.
Ã‚Â Maintain a good credit discipline:
If you are working towards building up the credit score, do your best to keep the balance low on the card. Use the card only for things that you can afford and pay the bills on time each month. If you cannot, it means you are living beyond your means and purchasing goods that are not within your affordability. Davis says, if you carry low balance on your credit, you will have to pay less interest fees, which will help you reestablishing the credit score as soon as possible.
Use student loans only for education expenses and not for other items.
Often times, students are found to use their student loans for buying cars and other non education items. This should be avoided as it is dangerous for young graduates. Davis says, student loans should be using the loans correctly and only for education purpose in order to build and maintain good credit.
Be an authorized user on parents’ credit account:
The firs credit account students should have is with their parents. The teens should be an authorized user on the parents’ account so that the latter can keep a watch on their children’s spending habit. This helps the students building up and maintaining good credit score because as you are an authorized user on your parents’ account, your credit score will boost up along with good credit score of the parents.
Thus, it is to be concluded by saying that following the above mentioned tips students can successfully build up their credit score as soon as possible.
Author Bio: This article has been contributed by Billy Patterson. He is associated with Oak View Law Group as a contributory financial writer. He likes to keep updating himself regarding recent developments in finance sector. He has written many articles on debt management, debt solutions, bankruptcy, credit score etc.