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"I would hope that we don't all have to learn from the school of hard knocks," says Cunningham. Epstein says financial literacy "needs to be a prerequisite for graduating. You should have to pass an exam before you're allowed to get a credit card, the same way you do to get a driver's license." Become an authorized user on your parents' account. "I always advise parents when the student is going off to college, unless you're 100 percent sure they're responsible, the first credit card that student should have is yours," Sullivan says. The teen should be an authorized user on the parent's account so the adult can monitor the child's spending. Additionally, this can help the student build credit via piggybacking, a controversial practice that FICO has decided to continue.
Regardless of the free T-shirts or perfume gift boxes that might come with application offers, resist the temptation to apply for a lot of credit quickly. The best way to keep a healthy credit score is to grow credit slowly. Use the credit card for occasional purchases, even if you don't need to. Sure, merely having the credit card builds credit, but it won't do much just sitting in your wallet. If you're afraid of racking up debt, don't be. "Getting a credit card means you start a credit history and shows on your credit report that you have one account and no late payments," Sullivan says. "But if you really want to start credit, you have to use the card."
When you have a bad credit rating based on negative information that is accurate, you can only wait for it to be removed over time. By law, a credit reporting agency can only report negative information for seven years and bankruptcy for ten years. For unpaid judgments, the reporting period goes back seven years or until the statute of limitations runs out. Criminal convictions and applications for over $150,000 of life insurance have no time limits. By starting to pay your bills on time and contacting the creditors that you cannot pay, you can start to change your credit profile to the positive side, but that will take time also. Start by getting a free copy of your credit report. Then assemble all your credit card bills and write them down. This will give both you and your credit repair company a starting point.
If you are getting credit cards for the first time ever, one of the obvious benefits of owning such cards is that you will be able to establish a credit rating. Further, by establishing a good credit rating over time, you will later be able to make larger purchases with your well-earned credit, like automobiles and homes. Finally, a well-established credit rating can help you rent cars and apartments, and sometimes help you get employment that may require a credit check. Alternatively, paying bills or even making purchases on the Internet require the use of a credit card. Unlike bank debit cards where you must have money in your checking account to pay your bills, credit cards allow you to pay your bills with your predetermined credit limit. Therefore, if you are a little short on cash during the month, you can still successfully make online billing transactions with the use of your credit cards.
During a time when personal identity theft is on the rise, protecting your credit card is more important than ever. With the implementation of a few pre-emptive measures, you can help prevent your identity from being stolen. More importantly, you will protect your well-earned credit rating. The minute you receive a credit card you should immediately document the account number, the expiration date, and the telephone number to call in case the cards are lost or stolen. Once you have documented the necessary information, file it away in a place where you can easily access it later; you will find the information extremely helpful if you lose your card or are a victim of theft. If your credit card is stolen or if you lose your credit card, you must report it to the issuing company as soon as possible.
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