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.
Tips brought to you by Farm Bureau Financial Services. For more information about products and services, call Shane Blanchard at 515 528 2319
