Bad credit stalks students after graduation

Credit cards and charge accounts can be useful but when used unwisely they can lead to long-term money problems for college graduates.

Along with rent, car payments, insurance, deposits, deductibles and other start-up expenses for the new college graduates, come choices of how to pay the bills.

“Credit is an important financial tool,” Terra Reid, FAMU alumna and professor at Morgan State University said.

“I’m so glad I didn’t go wild with credit cards in college because college students don’t know how important it is to have good credit.”

Credit implies that goods, services or money are received in exchange for a promise to pay the sum of money at a later time, according to financial success for college students, a Purdue University Web site.

It can expand opportunities or protect in emergencies but it is not to be used carelessly because credit is needed for rentals, reservations and travel.

Recent college graduates have to practice making good credit decisions while they are still in college.

According to the Alabama Cooperative Extension System, a service of the news and public affairs, the average undergraduate graduates with an average balance of $2,700 in credit card debt.

The percentage of undergraduate college students with a credit card increased from 67 percent in 1998 to 78 percent last year, which led to a graduate’s debt, according to the Nellie Mae study on WFMY News 2’s Web site.

Thirty-two percent of those undergraduates had four or more credit cards.

Among all age groups, credit card holders, younger than 35 were the least likely to pay their bills in full each month. On average, the less than 35 age group has 30 percent more debt than other age groups.

Having too many credit cards is an unknown mistake that causes graduate debt. Having too many credit cards may impact the overall credit rating.

Mortgage lenders, car loan companies, and other financial institutions use credit bureau information to check on an applicant’s credit history.

Some lenders may also see you as a poor credit risk if you have too many cards, according to the Los Altos Crier Web site.

Another mistake is not knowing that more employers are choosing to run credit checks on those who are applying for jobs.

Small mistakes like paying bills late may affect the credit rating. Some employers may feel that unpaid bills should have taken priority over other spending.

There are many steps a recent graduate can take toward ensuring good credit habits.

According to VipCredit’s Web site, credit cards are like a loan, you have to pay what you owe.

Graduates should keep track of how much is spent, save receipts, never lend credit cards to anyone, know that owning more money than you can repay can damage a credit rating, pay bills on time and know that the federal law limits liability for unauthorized charges to $50 per card.

“College students should be careful because credit card companies prey on students because they know that parents will help pay the bills,” said Terrell Freeman, a coordinator of student affairs.