Bad Credit Resource Center

Start building your credit record early - even before college starts, if you plan on taking out college loans.  Ask your parents to sign over a bill that you pay on time each month.  Get a credit card with a low limit and a bank account that you balance each month.  Avoid opening several charge cards at once - not only will they be hard to repay, but having several new accounts when you have a short credit history will actually cause your credit rating to drop. Get a part-time job. 

Each of these things can help you establish good credit, which in turn can help you get a good student loan rate.  More importantly, establishing credit early will help ensure that you have a long (and good) credit history by the time you graduate from college, which will help you with all your important, large post-graduation expenses.

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Whether you attend information sessions at the financial aid office, read about money in books, or meet with your bank’s financial officers, learning how to manage your money is an important part of your school education. 

For many students, their time at school is one of the first times they are responsible for finances - including bills.  Learning to handle this responsibility well early on in life help ensures that you will enjoy a good credit standing your entire life. Learning about money will also help you prevent costly credit mistakes.

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Many students fall in love with their credit cards. Credit card companies know this, and will routinely heavily advertise on college campuses, even offering students free food or gifts to fill out a credit application. While the convenience of credit cards is tempting, it is a good habit to use credit cards only for major purchases, saving cash for entertainment, food, clothes, and other like items.

This is because studies have repeatedly shown that those who pay cash for items routinely spend less than those charging or using debt cards to pay.

Using only cash for entertainment and other small needs help you control your spending and also ensures that you won’t end up paying for months for something that is long gone.

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Start building your credit record early - even before college starts, if you plan on taking out college loans.  Ask your parents to sign over a bill that you pay on time each month.  Get a credit card with a low limit and a bank account that you balance each month.  Avoid opening several charge cards at once - not only will they be hard to repay, but having several new accounts when you have a short credit history will actually cause your credit rating to drop. Get a part-time job. 

Each of these things can help you establish good credit, which in turn can help you get a good student loan rate.  More importantly, establishing credit early will help ensure that you have a long (and good) credit history by the time you graduate from college, which will help you with all your important, large post-graduation expenses.

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One of the advantages of student life is that it is relatively inexpensive.  Student housing or rooms rented with roommates lowers cost, on-campus facilities usually offer great services at discount rates, and many businesses offer student-only deals.

Try to take advantage of these offers to make your student money stretch further so that you have take out the smallest student loans possible.  Look around to find the best student-deal offers, ranging from travel deals to free tax filing services, available from your school and surrounding businesses.

Make use of the free services on campus - such as renting movies for free from the film department or working out in the school gym - rather than paying for these same services off the campus.
 

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Many students think that walking away on a student loan after graduation is a smart way to get rid of a debt.  After all, they no longer need the money for school and in fact need the money for settling into a job and new home. 

However, defaulting on a student loan is a terrible mistake in almost all cases, because it affects your credit rating very negatively.  If you have student loans, it’s important that you start repaying them on schedule and that you repay them on time.  Doing so will actually improve your credit score.

If you’re having trouble repaying your student loans, talk to your lenders rather than ignoring the problem.  Most lenders will actually give you a grace period after graduation so that you can find a job and settle into post-college life before repaying your loans. 

If you have several loans, your lenders may be willing to help you consolidate them into one larger loan payment that requires smaller monthly payments.   Some lenders will also give you a few months grace in case of unemployment.  Read your loan agreements carefully to find out what the terms of your student loans are.  If you need to, work out a different payment schedule, seek out refinancing, or find some other way to repay. 

Only default on your student loans as a last resort when you really have no way of repaying your debts.  However, be prepared to take a big hit on your credit score.  Once you default on one loan, it really counts against your credit rating - especially since as a new graduate you do not have a long credit history yet.  Common sense will tell you that lenders who see that you have defaulted on one financial responsibility will wonder why you wouldn’t default on their loan, as well. After defaulting on your student loan, you may be unable to get credit for some time and you will have to work much, much harder to re-establish good credit.

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The use of student loans are becoming a big problem for more and more students.  On one hand, student loans can help students who could otherwise not afford go to college. On the other hand, though, huge student loans can be a terrible financial burden after graduation. 

While it’s true that most student loans don’t have to be repaid until after graduation, the time after graduation usually carries other large financial responsibilities.  Many college graduates want or need a car, a good job, and possibly a house or home.  Each of these things requires a good credit standing, but too large student loans not only require larger monthly repayments but also may affect credit scores by overextending credit.

As tuition fees rise, larger student loans are becoming the norm, leading to financial hardship down the road for many students.  To avoid this, you should take out the smallest loan you can, relying more on jobs, savings, scholarships, bursaries, and other forms of financial aid to make up the rest of your tuition and living expenses.  You should rely on loans as a last resort - not a first. 

Student loans are an investment in your future since they can help you get the education you need in order to get a great and fulfilling career.  However, these loans are a serious and usually long-term financial responsibility.  They should not be undertaken lightly. If you need a loan to pay for college, you should get the smallest loan you can and should get the best terms and rates on it possible. 

In general, need-based government-subsidized student loans generally offer the best terms and rates.  After that, student loans from private lenders may offer decent rates.  Personal loans and credit cards should only be used when absolutely necessary to pay for an education, as these tend to have higher interest rates and require that you start repaying them right away.

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Student loans, regardless of the amount, need to be paid back.  Taking out the smallest loans you can and sticking to a budget can help establish good credit habits that can help ensure that you’ve a good credit score when you graduate from school.  Plus, since student loans are for the period you’re in school, you can easily budget because you’ll know exactly how much money you’ll make each month and how much money you will be spending on expenses for housing, tuition, books, etc.

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If you’re a student, you have a great secret weapon for credit repair and credit help, your school’s financial aid office.

Students are increasingly worried about their credit and credit scores… and for good reason.  Student debt is rising and the numbers of students who leave school with ruined credit scores is also rising.  Many experts blame larger credit card debts on rising tuition costs which lead to larger student loans. 

Despite the pressures of today’s student life, though, it is possible to leave school with a good credit score and in fact to develop good financial habits that can lead to a lifetime of good credit ratings.  There are a few tips that can make the college years a credit-booster instead of a credit disaster:

If you’re a college student, your school’s financial aid office should be one of your first stops at the campus.  Few students visit this office regularly while they’re in school, and this is a big mistake.  The financial aid office at most universities and colleges has more than enough information to help you keep your credit score in tip-top shape. 

The financial aid office offers one-on-one financial counseling, information about scholarships, tips on budgeting, books on money management, and many more resources.  The officers at your university or college financial aid office can offer you help on almost any aspect of financial help - including helping you figure out credit scoring.  Also, many financial aid offices have workshops that can teach you about dealing with money and credit, and even offer free tax filing services. 

In fact, the financial aid offices at most colleges and universities are so useful that you may want to call the school you attended in the past to ask whether alumni are eligible for any services at the financial aid office.  The resources that you a get for free from these offices are simply too good to miss.

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There are numerous online resources that can help you find credit information and can help you with your credit repair goals:
 
The FICO web site - www.myfico.com - contains lots of useful credit repair information and even allows you to order credit reports and scores.  The credit bureaus (transunion.com, equifax.com and experian.com) allow you to order credit scores and credit reports online. 

Through the internet, you can also get information on reporting errors on your credit report.  Your bank likely offers online banking as well, which can make managing your accounts easier and simpler. 

Most companies - including utility companies and credit card companies - will now allow you to get your bills right in your inbox.  This is a very handy feature as it allows you to get your bill more timely, it cuts down on the amount of mail you get, and allows you to get and pay your bill online. Plus, many accounting software packages, such as Quicken, now allow you to coordinate all your financial information through one program, which can make taking care of your finances much more automatic and timely. 
 

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