By Alexa Smith
From getting an apartment to buying a car – credit is an important part of your financial history. Once students get to college, it could be the right time to start building your own credit history. But with so many different credit cards and options available – how do you know where to start? How do you know how to stay out of debt? How do you know how to get out of debt?
ACCENT sat down with Ayeesha Green, a financial coach from the Student Money Management Office to get you started on your financial journey.
Students might wonder why they should care about credit. They may have their parents helping them out right now or just feel no need to get a credit card.
“Students should care about their credit because it can be the difference between having an affordable lifestyle and a super expensive lifestyle,” said Green.
Without a credit history, you may find you have to put down a higher deposit on an apartment or have a higher monthly payment for your car. Your credit history will also affect your auto-insurance rates. One thing many students do not know, is that employers can pull your credit history as well.
Green noted that ⅓ of employers will pull a modified credit report meaning they cannot see your credit score but they will be looking to see if you have late payments and if you’re financially consistent.
Green said students should start to establish credit as soon as they are ready which is usually when they are in college. However, there is a specific way Green suggests going about building credit. You don’t want to jump in too fast and get a credit card with a ridiculous interest rate and yearly fee.
Instead, Green suggests getting a secured credit card from your bank or credit union. She suggests using it for a monthly payment you are already making, such as Netflix or Spotify. Then set up an automatic payment to that credit card in the exact amount of that subscription. Put the card away and don’t use it for anything else. This will set you up to build your credit score without running the risk of credit card debt.
However, many students have already fallen into the trap of credit card debt and have found themselves with the pressure of paying off loans before even graduating college. For this, Green recommends creating a budget and looking for a place where you can cut back. Whether that’s less Starbucks a month or pausing a Hulu subscription. Take that extra cash and put it towards your credit card debt every month to start paying it off.
Green also recommends students set up an appointment with a financial coach at the Student Money Management office before opening a credit card. This can help students understand the different types of credit cards better and how to manage their budgets.
To schedule an appointment with the Student Money Management Office, head to their website and click “Schedule Your Appointment”. For more tips, follow them on Instagram @accmoney, on Twitter @ACCMoney512, and on Facebook.