College Grads: Hit the ground running on your path to excellent credit

Education savings. Piggy bank with graduation cap.

It’s a great time to get out of college and get into the job market. Unemployment has dropped and employers are hiring. So grads, get the job lined up and establish yourself with excellent credit. Tired of taking notes? We’ve done the work for you:

Get your credit score in order.
Start building your credit history. If you don’t have one, consider getting your first credit card, as credit bureaus consider the average age of your accounts when evaluating your credit score. When it’s time to buy a house, you’ll want to have a good score.

If  you struggle with impulse buying, you may want to consider another option: a secured credit card that is backed by a cash deposit. This limits your spending to what is in the card’s account.  If you have student loans, a credit card may not be necessary. Focus on paying down your student loans regularly – and always on time – to improve your rating.

Make more ways to save.
The financial rewards of a job are about more than just the salary. Does the company have a 401k match? Participate as much as you can with any employer contributions and put a little extra aside in an emergency fund of cash. Start today with $10 or $20 a week. Do not pull this money out of the account except in an emergency. Periodically check out how much money you have in the account. You’ll be surprised to see how fast it adds up and you’ll probably find you want to add more.

If your company does not offer a retirement savings program, contact a financial advisor about setting up an IRA or Roth IRA and get into the business of saving today.

Negotiate student loan repayment as part of your job benefits.
An increasing number of employers are contributing to employees’ student loan payments. Perhaps your employer doesn’t officially offer to help repay your student loans as part of your compensation, but you can always try your hand at negotiating this perk. It never hurts to ask.

Pay off debt.
The more debt you can pay down and the faster you can pay it down, the quicker you will find financial independence. This may mean living at home for a few months, a year or even more. Or it may mean fewer fancy coffees or nights out. You’ll be closer to financial freedom sooner and you’ll improve your credit score.

If your job is 9 a.m. – 5 p.m., Monday through Friday, consider finding weekend work or evening work at a home improvement store or restaurant. A little extra income goes a long way and you’ll have less time to spend the money you are earning.

Don’t make major lifestyle changes.
Just because you have a job and are making more money doesn’t mean you can start splurging on impulses. A big jump in income is a huge temptation to spend more on eating out or entertainment or weekly happy hours, especially if you’ve been living on a college student budget. Put raises and bonuses into savings.

Take advantage of student loan forgiveness programs.
The government offers federal borrowers who have worked for the government or a nonprofit for 10 years full student loan forgiveness. Another federal program partially forgives federal student loans for teachers who work in low-income public schools for five years. If you are in a position to take advantage of this type of forgiveness, check it out.

Once you are ready to consider homeownership…
Start small. A modest home is a good purchase. Consider getting a roommate to share expenses. You have years ahead of you to afford your dream home and not overextending your budget will make that possible.

You’ve accomplished so much already. Working toward financial independence today will help you to achieve even more tomorrow.

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