College is a time to meet friends, build a resume and expand your mind. It's also a time to gain your independence and learn a few life lessons without your parents there to save you. A time will come when you need to make a major purchase on your own. Whether it is buying your own car, stereo or you just need to pay for books, you will probably end up getting student loans.
You may find yourself shopping around for private student loans. Qualifying used to be an insurmountable task without a high-paying steady job, but today is easier than ever to qualify. You may only be required to have a job or some proof of income to get your first student loan. Take your time and shop around before you start applying. Pay attention to things such as loan terms, fees and annual percentage rates. Watch out for things like prepayment penalties. Be aware that if you ever make a late payment, it can instantly raise your percentage rate to a much higher amount. Many college students are unaware that even one late or missed payment will blemish their credit history for years. You want to be very careful in not only selecting the loan that's right for you, but also in your payment schedule and the amount that you pay. Paying more than the minimum looks very good on your credit and can save you a lot of money in the long-run. Never take out a loan for more than the amount that you actually need and make sure that you pay off the full amount as quickly as possible.
Small steps like taking out a private student loan can really help you build your credit. After college, it won't be long before you're in the market for a home. Buying a home may not be what is on your mind now, but it will be sooner than you think. Now is the time to establish a good credit history so that when the time comes you'll be ready. Acquiring a student loan, making payments on-time and for more than the minimum amount due, can really help you build a good credit score. It shows lenders that you were financially responsible during a time when most people are not. It will speak volumes for your credit worthiness and can be a big factor when you apply for a mortgage. Some mortgage companies require an eight year credit history before they'll approve you for a home loan, so start early and teach yourself the responsibility that you will need to be a success in your own life.
When you make your payments on time and when you are overall responsible for your finances, you will build your credit and you'll usually be rewarded for your efforts. Banks and credit card companies keep track of your history and may offer you lines of credit or increase the amount that you are able to borrow. Be careful not to overspend or use the loan money for something other than what it was intended for. When offers start coming to you, only consider them for things that are absolutely necessary and when there is no other way to obtain the money. Make sure that it is an amount that you will be able to pay off before any other unforeseeable events happen in your life. Student loans are a great way to teach yourself the discipline of paying off something long-term. Just be careful and don't take it for granted. Your credit score is something that you will soon hold dear and your life will be much easier in the future if you take care of it now.
