There are many college graduates who would like to believe that they are pretty savvy when it comes to finances. However, a recently released report indicates that many students know very little about important financial matters such as credit scores – something that could prove damaging to them in the future, as they may fail to understand the importance of building and maintaining a good credit score.
A study was carried out recently by a student loan group, LendEDU, which showed that more than 50 percent of college grads that they surveyed did not really know what a credit score was. Given the increasing importance of having good credit, this spells bad news for those who lack awareness of credit ratings and how they work. It is made all the worse by the fact that college graduates are the group that will most likely need to get credit in the coming few years in order to purchase a home, buy a car, and make other major life purchases.
College Graduates Have No Clue About The Importance of Building Credit
Experts have expressed concern over the lack of awareness that many college graduates have when it comes to credit ratings and finances in general. They are now urging recent graduates to take steps to build their credit so that they can enjoy a brighter financial future. They have also advised students to take time to learn about how credit scoring works and how it can impact upon their future, as this will then enable them to realize the importance of keeping a clean credit file.
One of the things that officials are advising college grads to do is to take out a secured credit card and then use it sensibly, wherever possible repaying the balance in full each month. This will enable graduates to prove their creditworthiness as well as build a solid credit profile. By repaying the balance in full they can also avoid having to pay interest on the balance.
One expert also said that graduates need to make sure they keep their utilization rate in check, and should ensure that they never use more than 30 percent of their available credit. This will help them to avoid falling into unmanageable debt and will show other lenders that the borrower is savvy enough to only borrow what he or she can afford to comfortably repay. This also makes it easier to avoid missed payments through lack of funds, which could otherwise adversely affect the credit score.