5. Credit, credit, who’s got good credit?
Assuming you’re not already knee deep in credit card debt after 4 years of easy credit and late-night pizzas, it’s time for you to get, and correctly use, a credit card. You’ll find that at many companies you’re expected to pay for your own expenses and then get reimbursed. This is when it’s helpful to have a credit card. However, if you’re going to use a credit card, be smart about it!
First, get a rewards card of some sort, but don’t pay for it. There are enough companies out there that offer cards for free that there’s no reason to pay for one. When most people think rewards cards they think airline but those really don’t work well unless you fly A LOT! Instead, look at a cash back card. I have 3 favorites:
- Upromise, by Citi. This card is ideal for those of you who have student loans. With the Upromise card when you enroll in the Upromise program (which you should do regardless) you get up to 10% back on Upromise merchant purchases, 2% back on gas (at Exxon and Mobile) and 1% on everything else. This money goes into a 529 savings account in your name and you can use it to either pay off current student loans or save for future education. This is helpful if you’re planning on going back to school. If you end up not using the money for your education, you can transfer it to someone else at a later date.
- Fidelity Investment Rewards. This card is best for those who are on a tight budget and don’t have any extra money laying around to contribute to a Roth IRA. The Fidelity card allows you to convert rewards points into cash into a Fidelity account at a rate of 1.5%. This can really add up after a while and would be a good, easy way to pad your retirement account.
- Amex Blue Cash. This is a no-annual-fee Amex card which offers up to 5% cash back on purchases. Cash can be used for anything so if you don’t have a specific use for it, just general cash is great. If you do get an Amex card, you should also consider getting a Visa/Master Card as well since there are areas where Amex is not accepted.
Second, make sure to pay your bill in full every month. The best way to build a good credit score is to prove that you can manage your credit and pay on time every month. The easiest way to do this is to set up a recurring bill (cell, cable, etc.) that you would be paying normally to be paid directly by your credit card each month. Then set up an automatic payment to the credit card to cover that bill and any other charges you may make. The most important thing to remember with credit cards is that they’re not bad if you use them correctly. Don’t charge more than you can pay in full each month and always pay on time.
Finally, make sure you monitory your credit report. Every person is allowed to get one copy of their credit report free each year from each of the three big credit agencies. What you should do is, every 4 months get your free report from one of the agencies. This will allow you to monitor your credit on an ongoing basis to make sure there’s nothing weird going on. You can get your credit report for free by visiting www.annualcreditreport.com. If you want a copy of your credit score you’re going to have to pay. The best place to get your score is www.myfico.com. That’s the official score that most companies use.
As you’re building your credit, keep in mind that mistakes hurt, a lot, and stay with you for a long time. Negative items stay on your report for 7.5 years from when they happened and with more and more people checking credit these days, good credit has never been more important. The following types of people will check your report to evaluate whether they should work with you or not: employers, insurance companies, banks, apartment complexes, utility companies and more. Having good credit is very important so take care of yours.
1. Ooh, pretty, sparkly
2. The super sized apartment with a side of furniture
3. The employee’s new clothes
4. Retirement? I’m only 23! I’ve got plenty of time!
Copyright 2007 by Amanda Moore. All rights reserved. |
