It’s time to think about your credit and how to establish good credit

If you’re like me, you probably didn’t have your own personal credit card or banking account that wasn’t connected to your parents prior to college. It’s a major financial commitment, and if you do not understand exactly what it is used for or how it can affect your future, you can put yourself in a position of financial hardship. A 2019 report by EVERGI and AIG retirement services found that, of the 30,000 college students surveyed, only 51% of students plan to pay off their credit card bills in full.


So what does this mean for you? How can you make sure that you are part of the 51% that can pay off their credit card debt with confidence? Well, it starts with understanding what credit cards and credit really do. There is this common misconception that credit cards are essentially free money. However, this is far from the truth. To put it simply, the way our economy works and the personal financial hardships Americans face, there is a need to rely on credit cards to make purchases on items that you need while also guaranteeing that you will pay it back at a later date. This line of credit that you create with your bank or other financier — other than helping you pay for purchases that you are unable to make on your own — also helps you build credit. 


By building your personal credit, loan providers, insurance companies, lease holders, homeowner associations and others have the ability to know if they are going to get paid, if you are a trustworthy person to rent out or give a loan to. If you have good credit or you frequently make payments to your credit card, you are likely to get a break on interest rates, get accepted at homeowner associations and make the purchases that help shape the life you want to make for yourself. Whether you like it or not, this is how a lot of business is done and can give you a little bit of a financial cushion when you are in need. In cases of emergencies or unexpected expenses, having good credit can be a great helping hand.


One of the positive things in building credit, especially during your college years, is the lack of immediate financial obligations and increase of financial independence. Essentially, right now, most college students either live at home with their parents or in the student dorms and are on meal plans. This is a great time to start making small purchases with a credit card, such as on gas or grocery items, without the financial stress of keeping a roof over your head or other immediate necessities. As long as you don’t overdo it, by building credit in college by making purchases on a credit card and keeping up with payments, you can get a step ahead in your financial future. 

So how do you keep up with payments and ensure that you don’t overdo it? My suggestion is, if you are about to get gas, buy groceries or make another purchase with your debit card and you have that amount in your bank account,  get in the habit of putting those payments on your credit card and pay it back later. Even if you literally pay the credit card balance when you get home, this is a simple way to start building your credit safely with the ability to recover. 


Even if you are especially careful with your money, there will be situations that you will find yourself in debt — even if it is as little as $10. So what do you do in that situation? Keep up with your minimum payments, set a reminder on your phone or rely on some of your savings to keep up with payments and replace it later.


This may seem confusing and maybe even a little overwhelming, but it is an important skill that takes some time to adjust to and manage. Everyone has their own way of managing their money and financial independence, but sometimes, you need some guidance when you fall behind or when you are not sure what to do — and that’s okay too. Feel free to reach out to your bank or look for online resources for support in helping you navigate your financial goals and building your credit score. If you really feel at a loss, ask a trusted family member, parent or friend how they manage. It can only help

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