College is the time when you are supposed to mature and move closer to being an adult. Part of being a responsible adult is learning how to handle money. Money is a big part of life. Without it you can be broken down, ugly, poor, trod upon and disrespected. With money you can be on top, beautiful, rich, powerful and respected. Part of learning how to deal with money comes from learning how to deal with your credit. If you learn how to handle your credit now then you will have a far brighter future. Here is your guide to credit:
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What is Credit?
Credit is a magical thing that says, “Live like a rich person now, there are no consequences.” What it is actually saying is, “if you are a burk with your money, then credit is going to put you in debt for life”. If you are not yet accustomed to debt, then take 10% of your wages or allowance and give it to a homeless person every month. Debt money is simply money that you never see again.
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Don’t Be Careful, Be Smart
You are going to need a credit rating if you want to get along in this world. A credit rating is a little scoreboard that every finance company on earth can see. Whenever you overdraw or do something silly, you are given a red mark on your credit rating, which will push it down. If you have a low credit rating then you will not be able to get a loan, car finance or a mortgage. At some point in your life, you are going to need one (or maybe all three) of those. If you do not have a credit rating at all (no credit history) then companies will not lend to you at all.
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As a Student You Funds Are Limited, so Start Small
If you are going for a credit card then find the cheapest you can find. You must also make sure that it has a small lending facility, maybe just a few hundred dollars. Your aim is to use it and pay it off every month. Your aim is not to see how much debt you can get into. It is also not your aim to max out the credit card. If you cannot handle paying back this sort of money then you should not move onto bigger credit cards.
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Calculate the True Cost of Debt
You have to look at the math over a long term. If you are applying for credit then you should look at how much the credit will cost you over the long term. If you are taking on a credit card, for example, you should look at how much the maximum is you can take out, and then imagine that you had that sort of debt now. First, calculate how long it would take you to repay that figure. Then take that time period and factor in all of the interest. You will then need to add on a few months to that you can pay off the interest too. That is how long you will have to pay off your debt for. This should show you how important it is to pay off your credit card every month.
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Pay All of Your Debts on Time
Every time you are asked to make a payment on your debt, you must pay it without fail. If you do not pay your debts on time then it will appear as a red mark on your credit rating. The worse your credit rating is then the more money people will demand from you when you want credit later in life. It is the way of the world. If you have money then people want to lend to you at the best prices. If you have a poor credit rating then people will only lend to you if you agree to pay a massive amount of interest.
