Graduating from college is a massive accomplishment that signifies a step out of adolescence and into adulthood. New graduates are often overwhelmed by fruitless job hunts, menial day-to-day tasks, and monetary strain. While there are numerous exciting opportunities and an increase in independence, adjusting to a post-college lifestyle can be challenging without a proper foundation. Financial insecurity is typical among recent graduates who often struggle to form responsible, reliable spending habits post-college life.
Laying down-solid financial groundwork is critical for college grads looking to take strides towards a brighter financial future. Post-grads should develop a realistic budget focusing on loan repayments and monthly income to avoid unexpected fees and expenses. Open a savings account and regularly add funds from paychecks or consider investing in a money market account where your money can earn interest throughout. With these strategies in mind, you’ll be able to take advantage of interest-building opportunities.
Setting clear financial goals begins with a firm understanding of your credit score. It’s not uncommon to have less than excellent credit as a young adult, and raising your score is easier than you think. With these five credit-building strategies in your back pocket, you can race down the fast track to financial freedom.
What to do with your student credit card post-graduation
Leaving higher education behind doesn’t mean you have to ditch the student credit card. Most companies will allow you to keep using the card as long as you want. Take advantage of student-friendly rewards programs and grow your credit score as you make monthly payments on time. Even if you don’t use the card regularly, hold onto your account to build a positive credit history.
Creditors appreciate a sustained history as it exhibits your ability to manage credit responsibly. For students approaching graduation without a student credit card, it’s never too late to apply. Cards like those from 1st Financial Bank USA feature cashback rewards and consumer protections that allow you to maximize savings and earnings safely. With modest credit limits, you can dip your toes into a low-pressure credit experience.
Become an authorized user
Take advantage of your parent’s excellent credit by becoming an authorized user on their line of credit. By adding your name to their card and setting clear boundaries around usage, you can benefit from their long-standing credit history without the financial risk of independent applications.
Get credit for every payment
Building your credit doesn’t have to rely solely on your spending habits. Take advantage of pesky rent payments and bothersome utility bills by reporting them to credit bureaus. Rent reporting services like LevelCredit send your positive payment history to creditors such as Experian, which can boost your score for future endeavors.
Apply for a credit-building loan
Modest credit-building loans allow you to build savings while you work on your credit. Unlike traditional loans, lenders place the decided balance into a sealed savings account. The payments you make over a set time—usually six to 24 months—will be reported to the credit bureaus. After you’ve paid in full, you’ll gain access to money incurred as well as a portion of the interest returned to you.
Maintain the optimal ratio
To build decent credit, you’ll have to spend money. As you utilize your card, pay close attention to payment dates, missed deadlines, and credit line guidelines to maintain a healthy score. If you reach your maximum allotted credit limit each month and only make minimum payments, your credit score will decrease significantly. The ideal utilization ratio uses no more than 30% of your available credit and keeps balances below 10% to boost your credit score to new heights.
Entering into adulthood comes with freedom and responsibility. Reduce financial stress by utilizing helpful financial tips and tricks to maintain and boost your credit score and propel yourself into a fruitful future.