These moves will put you in a good position to borrow money when you need to.Â
Your credit score will dictate whether you're approved to rent an apartment, purchase a car, or, in some cases, get hired at a job. But you may not put a lot of thought into your credit score until the time comes to enter the real world.
If your credit score isn't in particularly great shape, which may be the case if you're straight out of college, don't despair -- you're in good company, but also, you're now in a position to bring that number up. Here are a few moves you can make in the coming year that will allow you to do just that.Â Â
1. Get bills in your nameÂ
If you're moving back home after college, or are planning to bunk with a number of roommates, then you may not be the one to sign up for a cable plan or register with your local utility company. Big mistake. If you don't establish a payment history, you'll have a hard time boosting your credit score. So find at least a few bills to put in your name, and then make a point of paying them on time and in full on a consistent basis.Â
2. Make your student loan payments on time
If you graduated college with a pile of student loans, you're probably not looking forward to having to pay that money back. The good news, however, is that staying current on your loan payments is another good way to boost your credit score. And if at any point you start having trouble keeping up with your student debt, don't ignore the problem. Reach out to your lender and see what remedies are available to prevent you from missing payments.Â
If you took out federal loans for college, you may be eligible for an income-driven repayment plan, which should lower the amount you owe each month by recalculating your payments as a percentage of your income. And if you borrowed privately to finance your studies, your lender may be willing to negotiate the terms of your repayment plan as well.Â
3. Shed your credit card debt
It's not unusual to rack up some amount of credit card debt while in college. But if you want your credit score to improve, it helps to pay off as much of that debt as you can.Â
Your credit utilization is a major factor that goes into calculating your credit score, and it speaks to the amount of available credit you're using up at once. That number should really be kept at or below 30%, so if you have a total credit limit of $5,000, owing more than $1,500 at once is bad news. If your utilization rate is above 30%, paying off some debt could really help. And if you're able to pay off all of your debt, even better.Â
Remember, it's hard to graduate college with a stellar credit score, because another big factor that gets taken into account is the length of your credit history. If you've never really had any bills in your name, your credit history will be non-existent, as will your payment history.Â
The fact that you've had no experience paying bills means lenders won't know if you're a responsible borrower or not. As such, you may need to wait a bit of time before attempting to rent your own home or get approved for any sort of financing that requires solid credit. But if you make an effort, you may find that your credit score improves tremendously over the course of your first post-college year.
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