College students are under a lot of pressure. Not only do they have to attend class, study hard, ace finals, earn a degree, and juggle other priorities, but they also have to make lifelong friends, secure business connections, and maintain a certain degree of a social life. Sure, these students are great at multitasking these days, but how are their credit scores faring through their college days?
College students may be great at meeting project deadlines, but sometimes their credit card bill due dates get lost in the mix. Or how about those Finance majors? They might be math whizzes capable of calculating their credit utilization scores in their sleep, but have they maxed out their credit cards in the meanwhile?
Irresponsibility handling credit could result in poor credit scores, so regardless of whether college students have loads of responsibilities, they should place maintaining a good healthy credit score on their priority list because a bad credit score could come back to haunt them after graduation day.
Importance of Credit Score for Students
Landing a dream job
Of course one of the main reasons for attending college is to land a good job. All that hard work and experience along with summer internships make students great job candidates, that is, as long as they have good credit. In some cases, especially for finance positions, job recruiters will run a credit check on job applicants because employers often correlate good financial habits with good work habits.
In 42 states it’s legal for an employer to request a copy of the job applicant’s credit report to help determine whether the candidate is worthy of the position. And although this scenario won’t happen on every job interview, college grads may want to shape up their credit scores to prevent them from potentially limiting their job opportunities.
Renting an apartment
Many college grads are eager to move out of Mom and Dad’s basement and put their very first post-graduation paycheck toward renting an apartment. Sadly, this might not be so easy if they’ve racked up missed payments and outstanding debt on their credit cards though.
You see, often times landlords like to request a copy of the potential tenant’s credit report to judge the likelihood of the tenant paying rent on time. If the prospective tenant has a poor credit score, it suggests that he or she may not responsibly make payments each month, and the landlord may therefore deny the application.
So if college grads have terrible credit scores from their college days, they may have to wait it out a little longer at their parents’ house until they can build their credit scores.
Receiving good insurance premiums
Although applying for homeowners insurance or auto insurance may seem like an action to take much further down the road, now’s the time to start preparing. For those college grads who were careless with their credit scores and now have bad credit scores as a result, they should start focusing on building their credit right away.
Homeowner and auto insurance companies recently have started changing their pricing models to reflect consumers’ credit scores because recent studies have revealed a high correlation between poor credit scores and higher claims. That is, statistics show that those consumers with low credit scores are more likely to file claims than those with higher credit scores. Because of this, the insurance companies have raised premiums to accommodate the risk factors on those who have poor credit.
Long story short? College students should carve out time to responsibly manage their credit so that they can receive the best job offers, rental property, and insurance premiums after graduation.
writes and edits for CreditSources.org, an authority site with information on , cash advances, and all things credit.