College is the start of financial independence for a lot of people and this is a great time to start building your credit. However many people make major financial mistakes during their college years that can leave them in debt for years to come. If you are a college student its important to take control of your finances and these tips can help you do just that.

#1 Take Time to Choose Right Credit Card

Awhile back we wrote an article about the pitfalls of credit cards for people with bad or no credit. These cards are often cards that college students apply for because they are just beginning to establish a line of credit.

Signing up for your first credit card can be exciting but always take the time to find the right card for you. Its extremely important to always read the fine print with credit cards targeted at college students because some of these cards have extremely high fees that can make paying the card back a lot more difficult, and when you are a college student that has limited financial resources this can lead to big problems over time.

#2 Organize Your Bills And Pay Them On Time

When I moved into my first apartment I was overwhelmed at first with all of the different bills and I had a hard time keeping up. Between the rent, the cable bill, the water bill, my phone bill, the electricity bill and my credit card bills it was almost impossible to remember to pay all of these on time. After stressing out over paying everything on time for a few months I finally started keeping track when everything was due on the calendar on my computer.

Most credit cards will allow you to change your monthly due date, so if you have more than one card you may want to look into moving the due date for all of your payments to the same day. For most of your bills however you won’t be able to do this, however most banks now offer something called Online Bill Pay.

Online Bill Pay allows you to pay all of your bills directly from your bank account online. You basically can add all of your monthly bills to the service and it provides an overview of when everything is due, what has been paid, and also gives you the option to pay bills automatically every month. This way you will never miss a payment and this will help build your credit.

#3 Pay More Than Just the Minimum Payment Whenever You Can

One of the biggest mistakes that college students make is to just pay the minimum payment on their card, instead of paying back as much as they can immediately. Over time this is really how most college students get into trouble. The best way to avoid any problems is to immediately pay as much as you can off with all of your credit cards.

If you can’t pay off the full balance in one month, it’s not the end of the world, however don’t just make the minimum payment and tell yourself that you are going to pay the whole thing off next month, continue to make substantial payments and be consistent. Following this method you credit card will get paid off, it may take time but people who wait until they can pay the whole balance off, almost never do.

#4 Pay Your Rent and Bills With Your Credit Card

A great approach you can take to start building your credit is to pay your rent and bills with your credit card. This allows you to charge a substantial amount each month that you are able to pay off immediately. This works great with credit cards that have rewards programs. Most college students do at least some traveling and this is a great way to get your airfare and hotel rooms paid for through these credit card rewards programs.

#5 Watch Your Credit Score Like A Hawk

If you haven’t already, its important that you sign up for a credit monitoring service so that you can keep an eye on your credit. Everyone is entitled to a copy of their credit report for free, and this is extremely important, especially if you are looking to buy a house one day. There have been numerous times when I have had incorrect marks on my credit report that could have dramatically effected my credit score if I didn’t contact the credit bureau and take care of them. You can obtain a free credit report at truecredit.com

#6 Have An Emergency Savings Account

When you are in college its important to start building an emergency savings incase anything unexpected happens. If you are at school far away from home this can be especially important. It’s always good to have some cash stashed away incase you have car problems, things get lost of stolen, or just for general emergencies. This way if you do have a problem you avoid having to charge it.

#7 Avoid Lavish Spending

Just because you have a line of credit doesn’t mean you should go on a shopping spree. Although it can be tempting I have found that personal responsibility really comes into play when you have credit cards. When it comes time to pay what you spent back, its a lot harder than you often think.

A good rule of thumb in college is to pay your rent and your bills with your credit card and thats about it. Spend only what you know you can pay back in full the next month. This way you avoid the fees and also avoid getting yourself stuck in a financial ditch you can’t climb out of.

#8 Credit Should ALWAYS be Your Last Line of Defense

If you have unexpected expenses or an emergency and your emergency fund has run dry, make sure there are no other options before using credit to pay for these expenses. Even if you have to ask your parents for a loan, this is better than owing large amounts of money to credit card companies.

Try to speak with a financial advisor at school before making any drastic decisions because there may be better alternatives available. I got myself into a few tight situations in college however I managed to escape all of them without putting a dime on credit. Its amazing what you can do if you just slow down and think about situations before doing anything drastic. This is especially important to keep in mind when dealing with your finances.

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