Practicing Safe Credit: Considerations Before Getting a Credit Card

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Let’s be honest, are we really thinking about Fair Isaac Corporation scores right now? It’s safe to say that it’s more than likely not crossing our minds as much as getting our degrees. The closest thing to credit scores we’ve come across is probably creditkarma.com. Because of the lack of knowledge college students have about this subject, they’ve easily become the top target for credit card companies.

Having a credit card isn’t a negative thing, however, it can be dangerous if you don’t understand what you’re getting yourself into. According to Director of Financial Aid Martha Harbaugh, college students are targeted because they’re the future generation. Companies see students in the process of getting our degrees and their pupils turn into dollar signs. Harbaugh feels it automatically tells them that we’re going to earn a million dollars more than someone who isn’t in college. It makes college students appear to be a valuable target.

The companies say, “Let’s get them tied down, let’s get some customer loyalty going,” Harbaugh said.

It may sound off, but being a target isn’t as terrible as it sounds. According to Harbaugh, it simply means that in a sea full of eligible customers, companies say, “Here’s the one, that if we’re going spend time and energy on, here’s the one that offers us the most advantageous return of investment.”

One of the main mistakes students make when it comes to credit is simply believing it comes at no cost. This isn’t the case at all. Harbaugh said, “it doesn’t mean it’s free just because you didn’t have to take cash out of your pocket to pay for it.” Credit cards are instantaneous. You see something and it’s yours. The instant fulfillment students get makes it seem like it’s so simple that they don’t even bother taking a step back to realize the cost of what they’ve signed up for.

One of the major mistakes, Greg Moore, account major,  feels students makes with credit is making unnecessary purchases. The problems don’t arise at the time of the purchase. The problem comes in when you make these purchases and can’t pay them off. Moore has a credit card of his own. He says he uses them for food, gas and emergencies. “It’s not that hard to pay it off,” Moore said. He makes sure he sets part of every paycheck aside each month to pay his credit card bill.

Harbaugh discussed that if you’re using a credit card and you spend $500 at the end of the month, there are two choices. The first is that you’ve actually spent $500, so that’s a deal. The second is that you haven’t spend $500, and you don’t have the money to pay it back. Now the second possibility is where you find yourself in a sticky situation, and it’s hard to get unstuck once you’ve gotten there.

Harbaugh advises, “Consumers beware, you have to be careful.”

Director of Financial Aid Martha Harbaugh. Photo courtesy of Nya Dorsey.

Your credit can come back to haunt you.

Even if it’s from years ago, once your information hits the scene, it’s out there for everyone to see. And if companies dig deep enough, they can certainly find you. According to Harbaugh, there’s a difference between your FICO score fluctuating and simply having bad credit. Sometimes your FICO will have its ups and downs- that’s normal. Companies might see this and be more lenient when it comes to giving you a loan. However, if you just have bad credit overall, they’re not weighing whether the odds will be in their favor. The cannons are sounding off, you’re out of here.

Of course with time you can recover, but the question of why your credit was bad or why you went bankrupt will always linger in the air. “It’s like that ‘F’ on your transcript,” said Harbaugh. Even if you had all A’s every other year, you’ll still have to explain that you just couldn’t grasp the concept of what osmosis was.

The good news is that you can avoid all of this. You just have to keep your head in the game. According to Harbaugh it’s very simple. You have to be conscious of your bills, maintain a budget, minimize the amount you need to borrow and try not to add too many unnecessary expenses.

It also helps if you pause and ask yourself, “Why am I getting a credit card?” Understanding the answer to this question puts the purpose of your credit card into perspective. If you’re getting it for convenience or to establish credit, those are both spectacular reasons, according to Harbaugh. On the other hand, if you’re more of a “to see is to want” type of person, the credit card life may not be for you.

The other thing to be weary of is identity theft and credit card theft. People across the world are scanning trying to pick up as much information as they can on you. There’s only one you, so protect yourself at all costs. Leave no doors open for someone to come in and have your credit ruined. To avoid this, Harbaugh advised not to be cavalier, change your passwords often, don’t let an account go dormant and don’t trust your information with anyone.

Harbaugh’s theory is that “If you don’t spend any time with maintaining your credit, then you’re afraid of it, and if you’re afraid of it, that means it’s controlling you, you’re not controlling it,” So at the end of the day, be comfortable with where you are financially, and pay attention to your money coming in and going out.

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