It’s often tough for a student to manage his finances before he obtains a diploma. A large section of them tends to damage their credit history after failing to meet a loan that they took for pursuing higher studies. It takes a lot of effort for a student to pull himself out of this debt burden and look forward to other things in life.
Consider a few important tips that can help students with bad credit
- Open a bank account
A bad credit keeps hurting all positive opportunities that come your way. That’s why it’s even more important for you to find a co-signor while applying for a student loan. You may seek the assistance of a loved one like that of your siblings or your parents. Whenever your application is turned down by the lender or a bank, they can help you by cosigning on your savings account or checking account.
- Apply for student credit cards
For students, it’s not that tough to achieve a credit card. The fact that you aren’t earning yet doesn’t keep a lender from taking the risk as they all presume that your parents are bound to share your risk. You may build credit bay capitalizing on this opportunity. You should keep your credit card usage to a limit of 30% and they reimburse the balance every month. However, don’t opt for this step if you can’t manage it properly.
- Use a loan to diversify the credit
Online installment loans are your only credit to be reflected in the credit report for achieving a top-tier FICO score. It’s actually about taking a loan that gets repaid by way of a series of equal installments for over a period of time. This is what the student loans and car loans are actually about. Applying for a small personal loan can even help you build more credit if you can repay it every month. It even yields an opportunity for you to apply for a larger installment loan in the near future.
- Apply for gas cards, department store credit etc.
Your credit score isn’t affected much by these cards, but your credit report shows them off very closely. This one could be your low-barrier means of acquiring credit as you often end up spending your money at Gas stations, departmental stores, and other places. At a time when the other cards don’t yield any good option for you, this method often seems to be the lender of last resort with a low barrier.
- Obtain a secured card
A secured credit card necessitates you to place a deposit worth the credit limit even before you receive your card. This, in turn, will help your bank to identify your financial capacity towards repaying a borrowed amount. While using a card, you must remember that it needs to be your regular card after some time. It needs to report your credit information with the credit reporting agencies – Equifax, TransUnion, and Experian. You must understand that it could a rare opportunity to build credit.
- Make sure your bills are paid on time
Regardless of the other conditions, this one is not negotiable, short, and easily achievable. You must pay for all loans and utility bills on time. Make sure you don’t find an excuse for not paying it in full.
The best strategy
Your credit report often gets checked by a number of lenders at a time. You may choose to pay off all your loans and utility bill on time so that they leave a positive impact on your credit score. It will certainly be helpful when a lender or banker sends you a quote based on your credit history.