By Debra Avara
You’ve got mail!!
I don’t know how it happens, but somehow credit companies magically know that you are now over 18, in college, and they take that as a sign you are an adult and ready to handle a credit card. The offers start pouring into your mailbox and the temptation starts.
Not so fast, my young friend. You do NOT want to jump in and ruin your credit before your 19th birthday.
Credit used to be for ‘old’ people. Today, credit is used everywhere once you turn 18.
Apartments check your credit when you want to rent.
Utilities check to see how much deposit to charge you.
Car insurance rates are higher if you have bad credit. (And don’t forget to check with them for lower rates if you are an A/B student.)
Employers are now checking your credit. There are some jobs that you can NOT get if your credit is bad, and jobs you CAN be fired from if your credit goes bad.
(BTW – employers also check your Facebook page, and NOW are checking your ‘friends’ Facebook pages. Your friends may keep you from getting a job. Bosses assume ‘birds of a feather flock together’. So heads up!)
Loan rates are lower with good credit, including buying a car.
To try and prevent young people from getting in over their heads, Congress passed laws 3 years ago making it harder for ‘innocent’ teens to grab every credit card offered and ruin their credit in a matter of months.
Now, those 18 to 21 cannot get a credit card unless you have an independent source of funds (a job) to pay the bills. Failing that, you need a parent to co-sign the application (and submit written permission before the credit limit can rise).
Congress assumes that parents who sign for their children will have the independent funds to PAY those bills if the child doesn’t. This is not always the case, and credits are still going down the tubes.
The bottom line: Having credit is necessary. But, it is your responsibility to handle it wisely. Don’t go crazy and charge everything you want. The bill WILL come in and you need to pay it. Rule of thumb – if you can’t pay your bill off completely in 1 month, don’t buy it. You may not care now, but in a couple of years it will bite you in the behind.
Next week – I’ll show you how interest rates on credit cards REALLY work!!