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The Role Of Credit Scores For Young Adults And Students

by | Sep 14, 2023 | News

The credit scores have a significant impact on the financial lives of young adults and students. These scores are numerical representations that show how well individuals manage and repay borrowed money. Several factors contribute to credit scores, including payment history, credit utilization, length of credit history, types of credit accounts and recent credit inquiries.

For young adults and students, it is crucial to establish a positive credit history as it affects their ability to obtain loans, credit cards and even rent apartments. To begin building their credit, they can consider getting a student or secured credit card and using it responsibly by making timely bill payments. It is also beneficial for them to keep their credit card balances low in comparison to the available limit and diversify their types of credits. However, they should be cautious about opening too many new accounts.

It’s advisable for them to regularly check their credit scores. They can get a free copy of their credit report from each of the three major credit bureaus once every year by visiting AnnualCreditReport.com. Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness. A score above 700 is generally considered good while a score below 600 is seen as poor. These scores have an impact on whether you can get approved for loans and credit cards, the interest rates you’ll be offered and in some cases, even job opportunities. When you apply for housing or services, landlords and utility companies might also consider your credit score.

If you want to improve your credit score, it’s important to use credit responsibly, pay your bills on time and reduce any outstanding debt. Many organizations and financial institutions offer resources and workshops on managing credit effectively. This is particularly important for young adults and students as building a good credit history early on can lead to better financial opportunities in the future.