New grads, un­lock your fu­ture with a credit check-up

Daily Local News (West Chester, PA) - - BUSINESS - By Claire Tsosie NerdWallet

In col­lege, es­tab­lish­ing credit felt about as press­ing as an op­tional home­work as­sign­ment. But now that you’ve grad­u­ated, it’s sud­denly at the top of your sum­mer to-do list, with a dead­line of ASAP. And for good rea­son.

Good credit is your ticket to an eas­ier and more af­ford­able post­grad life. It could help you qual­ify for apart­ments, nab low­in­ter­est car loans, pay less for car in­surance, set up utilities with lit­tle or no de­posits, and more. And it’s not that hard to get started. With a few strate­gic moves this sum­mer, you can make sure fu­ture-you is ready to clinch those sav­ings.

See where you stand

If credit hasn’t been on your radar un­til now, you might not know whether you have it or not. So here’s where to start:

• Check your credit re­ports. The fed­er­ally au­tho­rized site An­nu­alCred­itRe­port.com of­fers free credit re­ports from each of the three ma­jor bu­reaus — Ex­pe­rian, Equifax and Tran­sUnion — ev­ery 12 months. These list your credit ac­counts and pay­ment his­to­ries, among other in­for­ma­tion.

• Check your credit scores. Typ­i­cally rang­ing from 300 to 850, these num­bers give you a bird’s-eye view of your credit. The most com­monly used ones are gen­er­ated by credit-scor­ing com­pa­nies FICO and Van­tageS­core. You can ac­cess these for free through cer­tain credit card is­suers and third-party sites.

Once you do this, you might dis­cover that you ac­tu­ally do have credit — and good credit, at that.

Such was the case for Jen­nifer Jackson of Atlanta, now 27, who got her first credit card in col­lege. Her dad also added her as an au­tho­rized user to a card with a pos­i­tive credit his­tory.

In school, “I didn’t know that I was build­ing credit,” says Jackson, who founded the blog ADLT101.com . “I wasn’t do­ing it on pur­pose. But it ended up help­ing me.”

After grad­u­at­ing, that good credit helped her get a low-in­ter­est auto loan, which saved her plenty, she says. Now, as a mil­len­nial tran­si­tion coach, she speaks to stu­dents in col­leges and uni­ver­si­ties about how to pre­pare for post­grad life.

No credit? Get started

When you’re start­ing fresh — no stu­dent loans, credit cards or other credit — your to-do list is straight­for­ward: Get an ac­count that re­ports pay­ments to the three ma­jor credit bu­reaus.

“You only need one credit ac­count to have a good score,” says Barry Paperno, a credit ex­pert

and blog­ger at Speak­ing of Credit. “That’s all you need. I don’t want peo­ple to think the bar is so high for get­ting a score, or a good score.”

After six months of re­port­ing from that ac­count, you’ll have enough credit his­tory to gen­er­ate a FICO credit score, he notes. You’ll be able to get a Van­tageS­core credit score even sooner.

Here’s how you can get

go­ing :

• Get a credit card: If you have no credit, you might have to start with a se­cured card, which means putting down a re­fund­able de­posit — usu­ally around $200. You might also qual­ify for an unse­cured card with your bank or a store-branded card.

• Take out a cred­it­builder loan: With these loans, the money you bor­row is typ­i­cally held in a bank ac­count while you re­pay the loan in in­stall­ments. Af­ter­ward, the money is re­leased to you.

• Be­come an au­tho­rized user: Jackson’s dad added her as an au­tho­rized user on one of his cards while she was still in school. “I had a re­ally old car in col­lege. He said, ‘OK, I’m go­ing to put your name on this card so you can use it if you need to go get some re­pairs done on your car.’” Be­cause he had man­aged that card well, it lifted her score, she says.

Al­ready have credit? Cul­ti­vate good habits

Find­ing out you’ve built a solid credit his­tory with­out try­ing can feel like pass­ing a test you didn’t study for: It’s a re­lief, and a lit­tle ex­hil­a­rat­ing. But re­sist the urge to men­tally check out. To keep that score in good shape, you need to con­tinue build­ing a pos­i­tive pay­ment his­tory, which means keep­ing your bal­ances low and pay­ing loans, credit cards and other ac­counts on time. Be aware you can do this on a credit card with­out car­ry­ing debt from month to month.

“There’s noth­ing to be gained by run­ning a bal­ance,” Paperno says. “There’s plenty to lose, par­tic­u­larly the high in­ter­est you’re go­ing to pay.”

By pay­ing in full and on time, you’ll avoid in­ter­est charges and penal­ties — and keep your score healthy.

“You only need one credit ac­count to have a good score. That’s all you need. I don’t want peo­ple to think the bar is so high for get­ting a score, or a good score.” — Barry Paperno, a credit ex­pert and blog­ger at Speak­ing of Credit.

This ar­ti­cle orig­i­nally ap­peared on the per­sonal fi­nance web­site NerdWallet. Claire Tsosie is a writer at NerdWallet. Email: claire@nerdwallet. com. Twit­ter: @ide­claire7.

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