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Resolve to build healthy credit

It’s not uncommon to hear New Year’s resolutions like “get healthier” or “be more responsible with money.” For those of you who are looking to better manage your money during 2015, focus on learning to build healthy credit.

Oftentimes, students don’t think that they have to worry about building credit while they’re in school, but that couldn’t be further from the truth. Financial decisions that you make while you’re in college will follow you for years after graduation. Negative items generally remain on credit reports for seven years and can interfere with things such as qualifying for an auto loan, getting a reasonable interest rate on a credit card, or even being chosen for a job.

So for those of you who are determined to get a handle on your finances now, here are five tips for building healthy credit that you can use starting today.

  1. Consider Credit Cards Carefully – It’s not a good idea to apply for every credit card offer that you receive. Before applying, carefully review the terms and check items like Annual Percentage Rate (APR) and how it is calculated. You should make sure you understand the penalties for missing a payment or making a late payment, and how those penalties will impact your interest rate and credit report.
  2. Only Purchase Items You Can Pay Off in Full – A great way to build credit if you do have a credit card is to use your card for a small purchase that you’re able to pay off in full right away. By only making purchases you can pay off in full, you show potential lenders that you are able to manage credit successfully. You’ll also avoid accruing interest.
  3. Read Terms and Conditions Carefully – It’s not uncommon to see low introductory APRs or no annual fees advertised to bring in new credit card customers. Make sure that you know the advertised rates and fees may go up after the introductory period expires. Also, make sure you understand the impact of any changes. You may end up paying more in interest!
  4. Make All of Your Payments On Time – The best way to build good credit is simply to make all of your payments on time. Making on-time payments shows current and potential lenders that you are responsible with your finances. You will also avoid late fees and avoid any negative impacts on your credit reports.
  5. Monitor Your Credit Report and Credit Score – Monitoring your credit report is an important way to keep your credit healthy. It allows you to identify any errors or discrepancies and report them to the credit reporting agencies. Monitoring also helps protect against identity theft by making sure that no accounts are being used or opened in your name without your knowledge.