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Building a Good Score While in College

By Sally Maison
Published: Saturday, September 26th, 2009

Credit history accounts for 15% of the credit score of a person. College students should learn how to manage debts well while in school to have a long and excellent consumer history. They should learn the importance of having a good rating and how it will affect them later in life.

Building a Good Score While in CollegeStudents should know that credit scores are not only important for people who are already working. What they do with credit cards today will be reflected by their accounts in the credit reporting agencies (CRAs). A good rating will easily help a person apply for an auto loan once he finishes college. It can help him easily find financing for his own home. It can even determine whether he will get the job he wants or not. Experts say that students think of ratings as work experience is to job application: if a person has a poor rating from the CRAs, he will not get most of the things he wants.

A student does not necessarily have to be a cardholder in college to build a good score. He can start by opening a checking or a savings account. A stable account will impress creditors in the future. Applying for a loan and paying it promptly is another excellent start. A student can go to a creditor and apply for a loan which will help him pay costs of his education. Paying monthly dues promptly can significantly establish the creditworthiness of a student.

Co-signing can also help during the term of the student loan. When applying to a creditor, a student can ask a person with good credit standing to co-sign with him. This is one of the fastest ways to establish creditworthiness. However, if a borrower is not able to pay off his balance, the rating or score of the co-signee will suffer.

Presently, college students who are below 21 can still apply for credit or store cards. Some may choose to take this opportunity. By getting a card and managing balances well, they will be able to establish themselves as excellent debtors. Next year, the federal law will change the rules and card companies will no longer be allowed to market to younger consumers.

Meanwhile, experts advise parents to educate children about debt management. Many marketers prey on the naiveté of youngsters to boost their sales. Children should be guided on their way to building good credit scores. Students, for their part, should know that what they do today will be brought back by CRAs in the future.

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