If there’s an industry that will build in you a distrust of capitalism faster than anything, it’s the finance industry. Learning about the bank fees for literally everything, the sneaky advertising for expensive lifestyles and the constant consumerism threw me for a loop, but you know what got my blood boiling? Credit scores.
A credit score describes to banks how likely you are to repay debt. Banks and lenders use it to decide whether they’ll approve you for a credit card or loan. The higher the number (its from 400 to 850) the lower your interest rate and the most likely you’ll be approved for a larger loan.
Like most college students now of days, my credit score started with my first student loan. I didn’t know that at the time. All I knew was that the government assured me that I would get a loan regardless of what number my credit score was. So I didn’t check it for over a year. The thought of going a year without know where I am financially now wold make me cringe.
When I came back home that Christmas, I decided I wanted to get financially savvy and decided I wanted to i finally downloaded my credit score from the Chase option. It was in the high 500s and I knew then I needed to make a change.
It’s taken about a year but I’ve finally gotten into the low 700s and I’m working to get to 800 before I graduate. Here is how I did it:
I monitored my credit. If you don’t want to download Credit Karma, most banks will let you check in with you credit score quarterly. Chase bank allows this, as well as Inuit’s Mint. They all allow this without damaging your credit, which used to be a thing. Capitalism, am I right?
Got a College credit card and used it to pay only Spotify and Patreon subscriptions ($10 per month). As I’ve stated in a previous blog, I am not attempting to pay off my loan while in college. But one of the main ways to improve your credit score is to pay down credit. So I did the next best thing:
I got a credit card from DiscoverIt for College students and keep the balance near zero for the whole year. Pay off credit debit as it appears.There is no reason to spend with fake cash, only to pay the price and then some for the next five years. Keep it little, keep it simple.
After waiting another year, I got another credit card. One of the stamps of a “trustworthy” debtor (sorry, borrower) is having a lot of open, in balance accounts. As such, I got an Amazon store card and use it solely for Amazon purchases that I can afford.
Credit takes time to build, but the earlier you start consciously building, the better it’ll be.