Applying
for a credit card after getting out of college can be tricky sometimes. In the
past, you could get a student credit card or use your parents credit
card(Authorized). But now you have to take into account a lot of other factors
that might sound new to you.
Positive
credit history is one such factor that credit card companies use to determine
whether you will be a good customer or not. Failing to pay your bills or late
payment will definitely hurt your reputation as a credit card user.
Here are the 5 ways a new college
grad can build credit. As already said, there are many factors which you need
to consider but these are the most important.
1) Pay your bills on time
This
is the most obvious ways for a college grad to build a positive credit history.
By paying your bills on or before time, you can avoid any penalties from the
credit card companies. This will not only cut your overall interest but also
help raise your FICO score. Credit card bureaus like Equifax and Experian
collaborate with the credit card companies to maintain the FICO score of the
user.
2) Get a credit card as soon as
your graduate
You
cannot have a positive credit history without owning a credit card. For a new
college grad, there are plenty of good credit card plans available. Apply for a
credit card that has no annual fee, low-interest rates, lenient credit history
requirements and a low APR(Annual Percentage Rate). Another safe way to build
credit is to apply for a secured credit card. These prepaid cards help you build
credit even with a bad credit history.
3) Clear your student loan
Your student loan also influences your credit score. The faster you pay off your student loan the higher you will see your credit score go. There are many ways to clear your student loan faster. One way is to get a job and allocate a major chunk of your salary to repay your loans. This might seem harsh at first but you can cut down your overall interest by more than 30 percent.
4) Review your credit report for
errors and mistakes
It’s
possible that your student credit company made some errors in calculation. If
such an error gets caught in the future when you apply for a new credit card,
you may get into unnecessary trouble. Worst case scenario, your application for
a credit card will be denied immediately. So, thoroughly check your credit
reports with the help of a calculator. Don’t forget to notify the credit
bureaus if you find any discrepancies.
5) Keep a close eye on your
credit score
As already stated, keeping a high FICO score is very important. Your credit card application is more likely to get approved if you maintain a FICO score of more than 600. Moreover, this score can vary depending on how responsible you are when it comes to paying your credit card bills. So, always keep an eye on your FICO score.
Conclusion
Since
you want a credit card just for the sake of maintaining good credit, don’t use
it to buy expensive things. Make a few purchases each month and pay the bill
immediately after you are done with your shopping. Your credit history will
determine how banks will treat you in the future. So, try to maintain a FICO
score as high as possible.
