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Students: Do’s and Don’ts for Credit Cards

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You’re young, ambitious and finally ready to make the American dream a reality. You found the perfect home and you’ve spent years saving tips from your part-time job waiting tables. You’re ready to apply for a mortgage, only to find out that your lender deems you as not credit worthy. WHAT?!

 

When you’re ready to purchase your very first home, one of the most important factors that lenders use to determine if you are qualified for a home mortgage is your credit score. While most people aren’t aware of how credit scores take time and effort to build up and maintain, we have a few tips for how you can insure that your credit is ready when you’re ready to buy that home.

 

Do open a credit card to establish credit

We’ve all got to start somewhere. Opening a credit card is just one way you can begin building and maintaining your credit rating.

 

Don’t sign up for every credit card that offers a free umbrella, towel or t-shirt

Yes – the “I Love College” shirt is totally hilarious, but you don’t have to sign up for a credit card to get one. You’ll be tempted on campus and even at sporting events to receive some silly knick knack in exchange for your very personal financial information. Your best bet is to research companies that offer options for credit newbies.

 

Do pay your bills on time

On-time bill payment is an important piece of the credit score pie. Paying your bills on your assigned payment due date each month will build a solid credit history over time. If you miss a payment, you risk lowering your score. It’s much harder to repair a low credit score than it is to maintain a good score.

 

Don’t spend more than you can afford

Unfortunately, credit card interest rates do not favor those without a well-established credit history. It is ideal to pay off your credit card statement balance each month so that you do not tack on extra expenses, also known as interest payments. Set a firm budget for expenses you plan to put on the card each month, knowing that you have the ability to pay your bills.

 

Do check your credit score frequently

Most credit card companies offer credit score monitoring as a customer benefit. Take advantage of these services and check your credit score often. You’ll be able to see if you’re trending towards that coveted 850 score and you’ll be prepared for when you’re ready to get the keys to you very first home.

 

So there you have it. Seem daunting? It shouldn’t. Setting yourself up for a bright financial future is just one step you’ll want to take prior to applying for a home mortgage. We’ll be here when you’re ready, but in the meantime, make healthy spending choices!