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College students: Prepare your credit for graduation

Sienna Kossman

Graduating from college can be an exciting, but scary milestone for young adults, especially for those still learning how to manage money and credit. I remember my pre- and post-graduation emotional highs and lows like it was yesterday.

My “little” brother is graduating from college in about a month. He’s worrying about paying for the real world. Student loan bills will arrive soon, apartment applications are asking to do credit checks, and he’ll no longer be living in affordable student housing with multiple roommates.

We recently chatted about how he should best approach post-grad life financially. Some of the tips I gave him, based mostly on my own lessons learned, might help others in similar situations. If you’re graduating from college this spring, it’s time to take control of your financial well-being like a true adult, but don’t freak out. Here’s some advice that will help you get started:

  1. Open a credit card and use it wisely.

My brother is still loves debit and does not have a credit card yet, but that needs to change.

Having a credit card will help him build a stronger credit profile for all those post-college graduation milestones to come, such as buying a car. He might have to start with a secured card, since his credit portfolio is young and slim, but that’s OK.

If you don’t have a credit card either, get one, but don’t take advantage of it. Spend within your means and pay the bill off in full each month. Chances are you’re graduating with student loan debt, so you don’t want to add credit card debt to your burden. After all, Federal student loan debt balances already average about $28,973 these days, according to Edvisor.

  1. Don’t spend much leading up to graduation.

Confession: I ate out more than I cooked at home during my last few weeks of college. I was moving soon and had to enjoy all my favorite local spots one more time!  My brother is feeling the same way. Based on what I’ve seen on social media, he sure seems to consume a lot of pizza and beer these days.

While my individual purchases weren’t huge and didn’t really push my budget over the edge, once I graduated I noticed how much those pre-graduation indulgences added up. Some of that money could’ve gone toward car repairs or my new apartment’s security deposit.

Have fun, but keep in mind what’s to come in the months ahead, especially if your post-graduation plans are still up in the air. Having extra money in your savings account never hurts, so for now, eat ramen and drink water at home a few more times a week.

  1. Pull a copy of your credit report and familiarize yourself with it.

I tried really hard not to shake my head when my brother asked what a credit report was a few weeks ago. I’ve been immersed in the credit world for years now and had to step back and put myself in his younger, less-experienced shoes.

He’d been looking at apartments and learned the landlord would check his credit upon application, a concept he didn’t totally understand. I told him to visit annualcreditreport.com to request a free copy of his report so he can understand what his potential landlords will see. Paying to see his FICO credit score isn’t a bad idea, either (about $20 each at myFICO.com), and you can see a free version from my.creditcards.com.

Becoming familiar with your credit score and report before college ends will also help you understand where you can make improvements and build your credit up in the months (and years) to come.

  1. Be realistic about post-graduation housing.

After years of dorm life, college houses and roommates, you’re might be daydreaming of a nice place to call your own. I know I was, and my brother is antsy to live on his own and in a “more fun” part of his city, too.

However, he’s quickly learning that nice neighborhoods mean high rent, especially when you aren’t splitting the bills with roommates. Before signing a lease for a new home you can’t afford, consider the cost of living in your desired city or neighborhood and compare it to what your first job’s starting salary might be. You don’t want to spend most of your income on rent when trying to start a career, paying back student loans and feeding yourself.

A funky city loft on the ritzy side of town might be desirable, but it might not be realistic right out of college. See if you can find a place of your own that’s more affordable first.

  1. Find a job – and it’s OK if it’s not your dream job.

If you want to function as an independent adult after college, you’ll need to find a source of income. Paying your bills and any debt depends on it, but no pressure.

Job hunting can be stressful, but keep an open mind. The job market is improving and if you’re diligent, odds are you can find a good place to start your career. Approximately 83 percent of young adults with college degrees are employed, according to a national study conducted by Navient Solutions and Ipsos.

Even if it’s not your dream job, a job is a job. I’m not saying you should immediately settle, but if money is tight, don’t let your pride make employment decisions. Pride won’t pay the bills and everyone has to start somewhere.

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