8 Credit-Building Tips for College Students

college studentsWhile parents' mail boxes are filling with credit card bills from summer vacations and back-to-school shopping, college students are likely receiving offers for credit cards of their own. 

Due to the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act), young adults under the age of 21 applying for credit now must demonstrate the ability to pay or have a co-signer in order to be approved.  Thus, the 21-year-old college student has replaced the entering freshman as the likely target for credit card marketing.

"Building a positive credit history while in college can certainly help the young professional move on with his or her post-graduation life," said LaTricia Schobert, director of Consumer Credit Counseling Service (CCCS).  "On the flip side, abusing credit can work against a person when trying to land a job, lease an apartment or buy a vehicle."

The NFCC's 2013 Financial Literacy Survey found that 33 percent of respondents indicated they learned the most about personal finance at home.  Although at first glance this may appear to be positive, problems often arise if the parents have poor financial habits which the children observe and subsequently carry into their own financial lives.

Furthermore, the survey revealed that only five percent attributed their personal finance knowledge to what they learned at school.  This number is not surprising, as many states do not include a personal finance course as a requirement for graduation from high school. 

Stepping into the world of credit without adequate personal finance training is asking for trouble, as responsibly managing credit is critical to building a solid financial future. CCCS recommends that young adults consider the following tips for successfully navigating credit:

  • Start slowly.  Don't apply for more credit than is needed.  A little plastic can go a long way, particularly in the wallet of someone new to credit.
  • Don't act like a kid in the credit candy store.  It can be tempting to splurge on music downloads and late-night pizzas, but small purchases can add up quickly. 
  • Never, ever charge more than can be paid in full when the bill arrives.  This is the cornerstone to successfully managing credit.  Use this financial trick:  Record each charge in the check register and deduct the amount from the balance just as though a check had been cashed.  This method guarantees that the funds will be available when it's time to pay the bill.
  • Choose the right card.  New homework assignment: Research what's behind the credit card offers. Fully understand the terms, interest rate, fees and credit limit, as these features will impact the final decision.  Some student cards also offer rewards such as miles or points that can be redeemed, but read the fine print before signing on the dotted line.
  • Think long term.  Negative marks on a credit file can follow a person for years.  Evaluate charging decisions in light of tomorrow, not today.
  • Protect the card.  Identity theft is rampant on campuses, and a credit card lying on a desk is as good as gold to a thief.  Since studies show that identity theft is often committed by someone the victim knows, don't be naively trusting. 
  • Don't allow others to use the card, as regardless of who runs up the debt, payment remains the cardholder's responsibility.
  • If things get out of control, remember that businesses still accept cash, and a debit card can be used for payment in most locations.  Don't hesitate to put the credit card away if things get out of hand. 

"The college student potentially has 50 years or more of credit life ahead of him or her, making it critical that sound financial habits are established at a young age," continued Schobert.  "Credit can be a friend or a foe.  That outcome is determined by whose hand is holding the plastic." 

Before applying for a credit card, young adults would be well-served by reaching out to Consumer Credit Counseling Service for a one-on-one financial review with an NFCC Certified Financial Professional.  For more information, call (423) 490-5620 or email cccsreception@partnershipfca.com

Posted by Heather Osteen | Topic: Credit and Debt

Which Websites Can You Trust?

September 10th, 2018

Have you ever had good intentions for researching an important purchase, but you weren't sure where to begin the research process? Maybe you know there are better credit cards out there, but you don't know where to find them. Or perhaps you're buying a car and you want to educate yourself before you start negotiating with a salesman.

Sometimes when you begin researching these topics, you wonder if the sites you're checking are providing honest information. Sometimes you wonder how a website operates - if it's funding comes from the credit card companies it reviews, can you really trust the reviews to be true?

Lucky for you, Consumer Action (a non-profit consumer advocacy group) has just released a Pre-Purchase Resource Guide. This guide covers resources for everything from credit cards and banking options, to automobiles, to health insurance, to wireless service! The guide covers reviews for over 35 different websites, explaining the benefits to each site, where it receives its funding and information, how much it costs consumers, etc.

As you contemplate your next big purchase, check out this great resource to help you narrow your research to the most effective websites available! Click here to view the Pre-Purchase Resource Guide.

Posted by Heather Osteen | Topic: Scam Alert

Cornelius* suffered from a disability that forced him to rely on family members for help with transportation, household chores, and financial matters.  Unable to pay all his bills on time, he was 7 months behind on his mortgage payment when the United Way referred him to Consumer Credit Counseling Service.

At CCCS, Cornelius met with Tina Williams, HUD-certified housing counselor.  In addition to helping him create a manageable budget, Tina assisted Cornelius with applying for a loan modification from his lender.  If approved, his monthly mortgage payment would be reduced, allowing him to consistently make on-time mortgage payments.

In August of 2011, Cornelius and Tina submitted his application.  Less than a month later they received notification that his request had been denied.  Undaunted, Tina and Cornelius determined to try again, submitting a second modification request. 

After months of waiting for an answer, Cornelius finally received word in October of 2012 that he had been approved for a trial loan modification.  His mortgage payment was reduced from $834 to $617 - a savings of $217 each month!  After making three consecutive on-time payments, his modification would become permanent. 

After two months, however, Cornelius' loan was sold to a new servicer.  He and Tina worked diligently to make certain that the new lender would honor the trial modification established with the previous servicer.  After many phone calls and the submission of additional documents, Cornelius' modification was successfully transferred and made permanent. 

He returned for a final counseling session with Tina once he received his final modification documents.  During their meeting, Cornelius confided that his brother had moved in to his home and was constantly demanding money, becoming angry when he refused to comply.  Cornelius had worked very hard to save his home and to stay out of foreclosure, and he was committed to keeping up with his payments, but he felt trapped and scared by his brother's behavior.  Tina referred Cornelius to Elderly Services, a sister program of the Partnership for Families, Children, and Adults, recommending that he talk to someone about his fears and the dangerous situation in which he found himself.  With the assistance of Elderly Services, Cornelius would receive resources to help provide physical, emotional, and financial protection from his brother.

Tina and Cornelius further discussed the importance of making on-time payments, buying medications, and taking care of necessities BEFORE giving any money to family or friends.  They talked about not allowing anyone access to his checkbook or debit card and avoiding situations in which Cornelius might suffer financial abuse. 

With Tina's assistance, Cornelius not only sustained a reduced mortgage payment, he also gained the financial skills he needed to maintain a consistent payment schedule.  His home wasn't just saved from foreclosure, his household was saved from financial instability!  And if Cornelius ever needs future assistance, Tina will be ready and willing!


 *Client's name has been changed to maintain confidentiality.

If you fear that you might lose your home to foreclosure, please don't hesitate to contact CCCS. Call (423)490-5620, email CCCSreception@PartnershipFCA.com, or live chat with us right now!

To learn more about Consumer Credit Counseling Service, click here.
To learn more about the Foreclosure Prevention Counseling, click here.

Chattanooga: 1-800-459-2227 | cccsfd@partnershipfca.com