Street Smart 101: Managing Credit

The stock market is teetering, financial hope is lingering and many people are falling victim to a financial crisis. Students are finding the harsh realities of credit management and the effects bad money management can have on one's future.

"When I first turned 18, I wanted to get a credit card because I figured I could use the money now and pay it back when I could," said Jennifer Grove, a junior psychology major.  "At one point, I couldn't afford to pay it anymore so I just stopped paying it.  Now my credit is horrible and I can't qualify for student loans or apartment leases, and I feel like I am sinking into a hole I just can't get out of."
Grove's story, though sad, is a common story among college students.

"I know plenty of friends that are already over $2,000 in debt just because of credit cards," said Kristal Morgan, a senior English major. "My friends just have worse and worse debt stories each year…. I have even had to use mine more recently with the price of school books and general cost of living at such a high."

According to Cynthia Wilson of American Financial Solution, 55 percent of college students get their first credit card their freshman year.

"On average, an incoming freshman with no debt in September will have about $1,500 in credit card debt by May," Wilson said.

Wilson stresses the importance of paying bills on time.

"Even being just a little late can begin to mess up your credit score," said Wilson. "I recommend that all students get continual copies of their credit scores so they always know where they stand."

Students can get these credit scores at sites such as annualcreditreport.com and consumerinfo.com.

Poor credit standing can have a lasting effect. Luckily, there are many steps to be taken early on to provide protection from early financial ruins.

"You should shop for the best credit card with the best rate and best term, and try and avoid annual fees," said David Anderson, a Bank of America financial advisor. "You should just have one card for emergency use and you can put it somewhere where you know you won't be tempted to use it for unnecessary reasons, like shopping or unnecessary trips out to eat."

 Anderson tells students to pay off any expenses that have been charged on the credit card in full.

"The sooner you can pay it off the better for your interest rate and for your credit score; you shouldn't be spending any more on your credit card than you can afford to pay each month," he said.

Anderson also recommends that all students have a specific monthly budget and keep track of all of their expenses.

 "Using a budget can help you visualize and keep track of the ongoing equation, how much income do you have and how many expenses you have," he said.

If a student finds themselves to be in debt there are still many steps that can be taken to get out before you are in too deep.

"Get a copy of your credit score and consult with a debt management specialist," Wilson said. "You can then work together to create a plan that will work for you to rebuild your credit; it's best to get your credit together as early as possible."
Senior computer engineering major, Clifton Lomax, knows the importance of keeping track of his credit score.

"I've seen the effects of bad credit, and I know I don't want that to happen to me," Lomax said.