By Marpessa Oliver
More Americans are attending and departing college in debt. Are you one of those students? Reportedly, compared to a decade ago, there are many more students borrowing large amounts of money to pay for college than ever before. Almost 10% of College Graduates are graduating with at least $40,000 in college debt. Getting caught up in debt because you are borrowing to pay for college is bad but coupling that with credit card debt is the worst thing you can do. Your credit score is negatively affected by large amounts of debt.
Don’t Abuse Your Credit Cards
Credit cards come easy in college. Paying them off comes hard. Having some credit is not bad. Using it carelessly and not paying at least the minimum payment each month is financially reckless. While in college you wonder why a bank would send you a credit card and you do not have a job. But you grab that card and go on a spending spree, then when the bill comes you remember again that you do not have a job. If you can not pay at least the monthly minimum you are going to get yourself and your credit in big trouble.
Pay on Your Student Loans
This may seem obvious to most but when the bank offers you a deferment it is easy to keep putting off making any payments to your college student loan. Remember you can’t be in forbearance forever and the payments will have to start being made. If you have the money to make the payments pay your student loans each month. The interest continues to accrue while you are in deferment so you are increasing your student loan debt when you do not make the payments. Don’t get me wrong; if you can’t make the payments, by all means, ask for a deferment. The other option is a credit disaster. Student Loan Defaults are very high in the USA. Not making payments and not communicating to your bank when you get behind will be reported negatively to all credit agencies. This will ruin your credit score before you have a chance to build it.
Get Professional Financial Advice
Making a financial plan is very important. Meet with a Financial Planner before, during and after you finish college to discuss your debt and your income. Knowing what you are making and how much you can pay out each month will help you make a road map to be debt free. A financial advisor will also explain how your credit score is determined and what will hurt and help it. Knowing this before hand will help you plan how to achieve the ultimate credit score.
More than half of College Freshman have at least $1,500 in credit card debt. All indications lead to the conclusion that the balance will more than double by the time those students are seniors because interest charges for credit cards are much higher than student loans. College Debt is a serious matter and it deserves your full attention. Making bad decisions about loans and credit cards while in college can set a pattern for a financial disaster that can ruin your life. Learn about credit, obtain your credit report, determine what it means in your life and only borrow what you need. Finally, pay back all debt on time and if you run into any problems, communicate with your lending institution immediately.
Marpessa Oliver writes for nssfns.org