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You did it. All the sweat equity, the all-nighters, and likely, the bad but cheap ramen noodles, you graduated from college. Hooray! It’s an accomplishment that can never be taken away.
Now. Your attention has probably turned to getting a job, perhaps moving, etc. But if you don’t realize it, now is the best time to focus on your finances, namely your credit profile. If you’re like most young adults, your credit score is probably a low priority, if it’s on your radar at all. But decisions you make in this area will follow you for a long time.
Right now, your credit file is probably on the thin side. In fact, you may not even have a credit card showing. But that’s okay because you can get going now. Here’s how to build credit as a college grad.
What is a Credit Report?
A credit report is a record of a person’s credit history from a variety of sources including banking institutions, governments, and collection agencies. It shows how much debt you have and whether you’ve paid your bills on time.
How Important is Good Credit?
Your credit score can impact everything from landing a job to securing a nice apartment. You’ll need good scoring for credit cards, a mortgage, or a car loan, so you should start establishing a good credit record as soon as possible. That means now.
How Can I Determine My Credit Score?
It’s easy to find your numbers. In fact, you can get a free score each year by going to annualcreditreport.com. Get in the habit of staying on top of this.
How Can I Establish a Credit History?
How long does it take to build credit? Is the question. Not that long — if you take a few steps. One thing you can do is ask a parent or another adult who has good credit and whom you trust whether they will make you an authorized user of one of their credit cards. You have a good chance because, in general, when people see that you’re trying to improve yourself, they don’t mind helping. Once this is done, an because your name is on it, the account will likely show up on your credit report.
After a few months, you should apply for your own card. Because you’re still trying to establish yourself, you may want to go for a secured card first. This kind of card requires you to put down a deposit that will equal your credit limit, which likely will be low. Like, a few hundred dollars. But you can use this card to get your credit going.
What About My Student Loans?
Yep, if you have them, and you likely do, you should start paying them off right away. How to pay off student loans fast is another story, but it can be done. In any case, paying off your student loansis one of the best things you can do to establish a credit history. Just make sure you do pay them off, otherwise you’ll be starting your credit portfolio off on the wrong foot.
Now that you know how to build credit as a college grad, you can get going on doing so in earnest. Trust us, one day you’ll be so glad you did. You may not hear your peers talking much about their credit portfolios, but that’s okay: you’ll have the better start in life. Take advantage of this time.