Credit & Identity Theft Prevention Tips for College Students

You've graduated from high school and are looking forward to attending college this fall.  Entering college is your first big step into adulthood.  Many students find themselves living on their own away from their parents for the first time, and this brings on many responsibilities, including financial obligations. 

College is when many young adults are first introduced to credit cards.  Over 75% of all college students have credit cards.  Using them wisely is key.   Making financial mistakes early can impact your credit score for years, and create future hardships when trying to get an apartment, buy a house, get the lowest insurance rates, or even attain a job- as many employers are checking your credit as a qualifier for job applicants.

Below are some helpful hints on how to establish and manage credit wisely. 

1. The first and easiest way to start building credit is to become an Authorized User on Mom or Dad's card.  This will help you build credit, and give you instant access to their credit line-first though, make sure they have good credit.
2. Research and get a student credit card prior to going to college.  Look online for the card that offers the best rate, APR, report to all three bureaus, and have no annual fee.  Only apply for one card-too many credit applications will lower your score.
3. Do not get a credit card on campus!  On August 22^nd, the credit card act final installments went into place.  This act has specific rules regarding credit card issuing to students.  For instance, credit card issuers are banned from issuing credit cards to anyone under 21; unless they have adult co-signers on the accounts or can show proof they have enough income to repay the card debt. And now, credit card companies must stay at least 1,000 feet from college campuses if they are offering free pizza or other gifts to entice students to apply for credit cards.
4. When you get a credit card, manage it wisely.   Use the card smartly, keep debt low (below 30%), make payments on time, and after six months of use, pull your free credit report to make sure everything is reporting accurately-if not, file a dispute on any inaccurate information-for dispute contact information as well as a sample dispute letter, please go here.
5. Once you have established some credit, you may want to apply for another credit card or line of credit.  Slow and steady building of credit is essential.  Start small and once you have mastered managing one credit obligation, you can apply for another.

ID theft

Unfortunately, identity theft on college campuses is on the rise.  College students live closely with each other, spend a lot of time on the internet and are routinely asked to divulge personal information such as their social security number in order to access files, register for classes, etc.  That combined with statistics that show a large percentage of students are not diligent in keeping up on their checking account balances or credit card balance and are not careful about destroying documents containing personal information before discarding them, is a recipe for disaster.  Becoming victim to ID theft could wreck your credit score for years, and keep you from getting the best financing possible on down the road.  The key is prevention. 

Below are some tips to help you avoid identity theft

• Opt Out-over half of all college students receive pre-approved credit card offers in the mail every week!   Not discarding of these properly, or moving and not notifying the post office of your change of address, could leave your pre-approved credit offers in the hands of an identity thief.  This is the number one best protection from identity theft-plus students won't be tempted by pre-approved offers in the mail.  http://www.mcmf.net/MCMF_LSLink6.html
• Write down all information, drivers' license, social security card, insurance card & credit card with all account & contact info.  Keep this in a safe place at home with mom & dad in case you lose your wallet.   The MCMF website has information on how to contact the bureaus & place a fraud alert on your credit file if you have been a victim of ID theft.    http://www.mcmf.net/MCMF_FAQLink3.html 

Student Loans

In 2010, graduates who took out loans left college with an average of $24,000 in debt. At the same time, given federal and state-level budget cuts, more and more people are turning to private lending as a source for their student loans.

Student loans are debt, just like any other type of debt and are reported to the three credit bureaus.  Use student loans wisely.  Do not borrow money to cover living expenses but only use student loan money for tuition and books.  Student loans do appear on your credit report and not paying them in a timely manner will negatively affect your credit score.

Remember the goal is to graduate with as little debt as possible.  This includes credit card and student loan debt.