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Working on Your Credit Score in College

Many of us know that building credit is important and that keeping a good score is needed for everything from loans, other credit card accounts, employment and even getting a house. In order to get anything without your parents help, the world really just wants to know that you’re not debt.

Luckily if you go on any credit card website like Visa or MasterCard, they all have tips for college students about credit.

Here are some things you’ll need to keep in mind when getting a credit card in order to keep your record clean.

Look for hidden costs

Sure they say “No Annual Fee”, but what you don’t realize is there are other fees to watch out for. You have your “Late Fee”. Pretty self-explanatory, but if you need the explanation, this is basically the fee you receive when they don’t get your payment on time.

According to MasterCard, paying a late fee only twice a year could cost more than that annual fee. Another hidden fee is the “Over-Credit-Limit fee” which of course means when you go over your spending limit.

Pay attention to how they set the fee. Some cards have a set fee like $5 or $10 while others can charge you a percentage of what you went over.

Know your limit and use your card wisely

You don’t want to go over your limit ever. So make sure you don’t impulse buy which could cause you to overspend and then you’ll be getting that “Over-Credit fee” along with a bad mark on your credit report.

Visa says to remember the 20/10 rule. Which is to never borrow more than 20 percent of your annual net income and never let your monthly debt payments become more than 10 percent of your monthly net income.

Pay on time

This one seems like a no-brainer, but still you have to remember to pay your bills on time. When determining your credit score, they look at your history to see how responsible you are.

Also, try paying more than the minimum. Some cards have grace periods where if you pay the full purchase within so many days it’s without interest.

If you do pay the minimum, in the long run, you’ll end up paying more for what you bought than the original price.
Keep in touch with the company

Make sure you always notify your card company if you change names, address or job. You might end up not receiving your bill and then run into a late fee. Let them know if you cannot make a payment on your account, they may be nice and help you out by creating a special payment option.

So why are these tips important? Well they’re all factors into what determines your credit score.

They look at your payment history, the amount of debt you’re in, if you have a stable job or home, amount of unused credit cards and the number of credit inquires.

If you want to stay on top of your credit score, because you should check it at least once a year, you can go to www.annualcreditreport.com to get a free report.

Sources:
usa.visa.com/personal/student
www.mastercard.com/us/personal/en/learningcenter/creditwise/basics

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