College campuses are abuzz with the pursuit of higher education. For many students, college is their first experience with managing personal finances, and the allure of credit cards – spend now, pay later – can be hard to resist.

A study by Sallie Mae found that 82 percent of college students with credit cards carry a balance from month to month, incurring finance charges and putting their credit history at risk. Once a person’s credit history becomes adversely affected by poor financial choices, it could result in more than just a high interest rate.

Job applicant – Nowadays, employers routinely check a person’s credit history as part of the hiring process. Some employers use credit checks as a simple character reference tool. A good credit report may indicate trustworthiness and dependability.

For rent – Landlords often rent to people with the best credit histories, and for good reason. Having a favorable credit history may also help lower the security deposit required or the need for a co-signer on a lease.

Loan approval – Getting approved for a car loan or mortgage is easier with good credit standing, and often leads to a more competitive interest rate.

Car and home insurance – History has shown a connection between credit history and insurance risk. A possible reason is that people who are financially responsible tend to be responsible in other areas of their lives, which may lead to fewer accidents.

For that reason, a good credit history usually means lower insurance premiums.

Making smart financial choices while earning a degree could help future graduates save money now and in the future.

Source: Sallie Mae Inc., “How Undergraduate Students Use Credit Cards: Sallie Mae’s National Study of Usage Rates and Trends, 2009,” www.salliemae.com, visited June 23, 2011.

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