How Can College Students Avoid Credit Hassles?
Aug 17, 2011 | 1359 views | 0 0 comments | 6 6 recommendations | email to a friend | print

How Can

College Students

Avoid Credit

Hassles?

Expert Reveals Secrets to

Establishing

And Keeping Good

Credit

 

As hundreds of thousands

of parents send their kids off to college in the coming months, many of them

will be wondering if it marks the last time their children will be living under

their roofs.

 

According to a study

conducted by Twentysomething Inc., a consultant firm specializing in young

adults, 85 percent of the class of 2011 will wind up moving back in with mom and

dad once they get their degrees. The cause? A combination of a shrinking entry

level job market and crushing college loan debt.

 

The average student accumulates over

$23,000 in student loan debt and $4,000 in credit card debt during their years

as an undergraduate student,” said Gabe Albarian, a former college student who

avoided his own credit crisis during his college years by following the advice

he offers in Financial Swagger (www.financialswagger.com), a guide

for young people who want to escape the pitfalls of credit disaster. “All these

stats basically tell the same story: our next generation of college graduates

will enter the next phases of their lives in a personal finance hell composed of

a combination of crushing debt and poor credit.”

 

But it doesn’t have to be that way.

Albarian has composed a few tips aimed specifically at helping those who are

just entering college or about to graduate establish and keep a good credit

rating. They include:

 

·       

New Credit Cards – Credit card companies love to

hammer new students and new graduates with seemingly generous offers of

unsecured credit cards. Don’t take the bait. There are other ways to establish

credit without opening yourself up to the slippery slope of introductory

interest rates that change after 6 months or the temptation to use that credit

to live above your means.

 

·       

Authorized Users – If your parents are financially

responsible (not always the case sometimes) and pay their bills on time every

month, I suggest that you be added as an authorized user on their credit card.

Make sure to provide your personal information and social security number to the

credit card company so that your credit history report will reflect transactions

performed on this account. In about six months, after you’ve learned with the

authorized user training wheels how to manage your credit reliably and

maintained a responsible payment history, you will receive your own credit card

offers.

 

·       

Secured Credit Card – The temptation will be to apply

for an unsecured credit card, but that’s still not wise or necessary to

establish good credit and good habits. Instead, apply for a secured credit card

at your local bank. With a secured credit card, you place a nominal amount of

money in a savings account that cannot be withdrawn as it is used as recourse to

pay back your debts in case you do not pay them yourself. In essence, your

spending limit on your secured card is exactly the amount you place in the

linked savings account – hence, your debt is secured by the money in your

account. Just like a normal credit card, you will receive a monthly statement to

pay off a portion or all of your debts but meanwhile your payment history will

be reported to the credit bureaus. Within months you will receive offers for

other unsecured credit cards. It’s not necessary to have more credit cards than

you need, because not only will it present temptation, but it may also lower

your credit rating.

 

“The bottom line here is that once

you have use of a credit card, you want to pay your bills on time, keep your

balances low, don’t take on more credit than you need and if you’ve missed a

payment you should get current and stay current,” he added. “Good credit can be

your best financial friend as you go through life and bad credit can be the ball

and chain that drags you down.”

 

About Gabe Albarian

 

Gabe Albarian, a 28 year-old

businessman has worked in real estate sales, finance, and investment for nearly

10 years and has done extensive consulting work in personal finance for both

individuals and groups. He earned his undergraduate degree in Political Science

at the University of California, Los Angeles and is currently pursuing his

Masters in Business Administration with an emphasis in Finance at the Marshall

School of Business at the University of Southern California.  

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