Young adults are being bombarded with warnings. Avoid a cash advance, don’t use credit cards, limit student loans but build your credit to help assist future finances. We all know that eventually car loans and/or a home mortgage will come around. In order to have good credit, we have to have credit and then manage it wisely. What does a young adult do when just getting started out on their own?
The sooner a person can start building credit, the better. Obtaining credit and ruining it simultaneously will not protect the future needs. Good credit comes in handy. Not only will it keep the doors open for future financial needs, but it will keep the cost of interest to a minimal. Low interest offers a great savings to those with credit cards and loans. There are thousands of dollars to be saved over a lifespan when a credit score stays high. It makes good sense to start building credit in the right direction.
Student loans are one of the first types of credit available to many young adults. These loans are considered installment loans similar to auto loans and home mortgages. Installment loans show great budgeting skills when a set payment can be made over many years. Besides credit cards opportunities, student loans are one of the first steps into financial matters.
Cash advances are no credit bureau check loans.
Just because a cash advance is an easy money opportunity for someone without a credit history, it doesn’t make it a good idea. The third party money needs to have a positive mark on your credit history in order to have it help build the score. A cash advance has no record of the loan transaction unless it is defaulted upon and ends up on the desk of a collections agency. As soon as the collector reports the bad debt to the credit bureaus, it will take seven years to have it removed. There is nothing a cash advance can do to help build credit for a young adult unless it is being used to prevent other bad marks from showing up on a person’s credit history.
Let’s get back to the student loans. As good as they are to help build credit as well as offer the opportunity for higher education, limiting the need for them will still help protect finances over the long run. Student loans are some of the most forgiving loans out there. Yes, you can mess up and your efforts to correct the problems will be rewarded. Federal student loans will report negative handling of the account, but they will also take off the negative report once it is all straightened out and payments have been caught up.
You can limit the amount of student loans needed. Take your first two years of classes at a community college and save on tuition costs. Work over the summer and put the earnings towards school. Apply for scholarships to decrease costs. Talk to a school counselor and find out what other measures you may qualify for in order to keep the student loan total down to a minimum. A small loan will still help to build credit. What it won’t do is weigh down on your shoulders while you work to get your foot out in the adult world of being financially responsible. Stay away from cash advances, open up a savings account, limit any loan and manage your credit in a positive manner.
