College is time to build good credit
Val Bontrager / KANSAN
Credit cards can be good and bad for students.Many students end up in debt when they abuse their buying privilege.Others use them responsibly and obtain even higher credit.
By Alana Slatter Special to the Kansan
Dress for success. Get a resume ready. Find a new job in a new city.
Graduating seniors hear many important tips on how to survive in the real world, but one important tip is often left out: Get good credit.
Young people are turned down for loans every day because of poor credit history or no credit history, loan officials say, and it takes a loan to buy that first car or first living-room suite.
Rod Spencer, St. Louis junior, knew this.
"I got a credit card my freshman year in order to establish credit," Spencer said. "This was the easiest way to get credit."
But many students often do not realize that earning a good credit history usually begins when they enter college.
Cindy Yulich, vice president of Emprise Bank of Lawrence, 2435 Iowa St., had some advice for students.
"It tell most students to start by opening up a checking or savings account," she said. "It all starts with this easy step. If you can keep up a regular bank account and have no overdrafts, you are headed in the right direction."
But students do not always do a good job balancing their checkbooks, resulting in bounced checks. That is something that is sure to be noted on a credit history report, some bankers in Lawrence said. It is also wise to keep a substantial balance in bank accounts.
The next step for students is to take care of any credit card accounts that they already have established. Credit card companies make it very easy for students to establish bad credit.
"Many credit card companies provide students with solicitations around campus," said Teresa Smith, loan official at Bank IV, 900 Ohio St. "These inform students about the easy steps that they need to take in order to obtain their credit card."
When students get their first credit cards, their credit history has begun. But because
it is so easy to obtain a credit card when students get to college, they can run amok. Unfortunately, it is not as easy to pay the balances when the bills arrive as it was to sign the receipt.
"Students need to get credit cards with very small limits," Yulich said. "It is also best to have a limited number of these credit cards. It looks good to loan officials if these accounts can be maintained."
Can a student with no credit cards and no bank accounts possibly have a credit history?
Credit tips
"The Ultimate Credit Handbook," by Gerri Detweiler, suggests the following credit tips for people ages 18 to 24:
Live on your income, not credit.
Start a regular savings plan.
Look beyond today and plan for tomorrow.
Set short- and long-term financial goals.
KANSAN
Prepare for changes in lifestyle.
The loan officials say yes. They often look at rent history.
"If a student has no credit history with credit card companies, we often call the apartment complexes where the student used to live or is currently living," Smith said. "We take into consideration whether or not the student has paid his or her rent on time. We also look to see if the utilities have been paid on a regular basis."
A significant bearing on loan approval is the work status of the applicant. Having a job always helps. It shows that a person is trying to earn an income to be able to pay back a loan, credit counselors said.
"Whether or not the student has had jobs for extended periods of time can show stability or instability," said Debi Waggoner, loan official at Mercantile Bank, 900 Massachusetts St.
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