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How can Young College Students manage their Credit?

Posted on August 7, 2013 | in Credit Cards | by

minimize your credit card usageCollege students are the ones who fall easily into debt. This is because, they are the ones who get easily tempted. They are the ones who start living alone, all of a sudden. Adjusting to the new course, adjusting to new environment and adjusting to the new life is not easy. Moreover, the sudden pressure of high education takes a toll on them. So, majority of the students tend to depend on shopping and partying, thereby incurring huge debts. Debts affect your credit and it becomes hard to become debt free soon or improve your credit too, at the same time.

Therefore, it is important to avoid borrowing as much as possible, and lower your expenses too. This would also help you maintain your credit rating. Whether or not you can get a job after the completion of your course, will not only depend on your educational qualification. The employer would also check with your credit rating.

How to Manage Credit when in college

In order to manage credit, when in college, you would be required to:

1. Design and maintain a debt payoff plan – You will have to draw up and follow a debt payoff plan, if you want to pay down the debts. It is mainly high debts and missed payments, which has a negative effect on your credit. So, you will have to try your best, to pay down the debts, as soon as possible. You can follow the debt snowball payoff plan or the debt avalanche payoff plan. You can also follow the debt snowflake payoff plan.

2. Keep a check on the credit reports – If you want to avoid incurring debts as a student, you will have to keep a check on your credit reports. These have every details of the accounts you have, the status of the accounts, and various other details. So, if you check the credit reports from time to time, it can help you maintain your credit.

3. Make minimal usage of your credit cards – Credit cards are easy to use, but credit card is the main financial tool which easily gives rise to debt. So, as a student when you have almost little or no income, it would be wise of you to minimize your credit card usage.

4. Better your self controlling skill – You will have to muster the self control skill. This is one of the most important aspects of managing your finances. Self control can help you avoid unnecessary expenses and incurring too much of debt.

5. Make sure you know where the money goes – Whether you are using it for your tuitions or your daily expenses, or anything else, make sure you are aware of where the money is going. For that, you will have to maintain a list of the expenses you make in a week and also in a month.

6. Build up an emergency fund – You will have to build up an emergency fund, for various such situations can crop up, out of nowhere. These can be a medical condition, or a debt payment, helping a friend or so on. It would never be wise to borrow for every other emergency situation. It is rather wise to maintain an emergency fund. This way you will also get to muster the habit of saving money.

The above are the strategies which can help you manage the debts and maintain your credit at the same time. Richard Boyum, professor emeritus of counseling and psychology, at the University of Wisconsin-Eau Claire, says “There are many opportunities to spend money and some students think of money as something to spend rather than as something to save.” However, with time they learn that it is extremely important to save money.

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