Credit 101: The Guide Graduates Need

Written by Blossom

September 7, 2018

Before college, you probably never needed to worry about credit. You might have a vague idea of what it is and how it works, but most students see credit in simplistic terms. Credit allows you to buy things that you wouldn’t be able to afford and pay it back later. This is probably how you’ll kit out your new apartment once you graduate and how you’ll afford that new TV. Unless of course, you’ve already started saving. If you are already saving up every month, then you may not be in this position. But with the new survey that says most people don’t even have a thousand in savings, we’re guessing this doesn’t apply to the majority. So, let’s break down what credit is, what you need to know about it and how it can help or hinder your life.


Do I Need A Credit Card?


You don’t need a credit card. There’s nothing that says you have to have one in your name. However, at some point, you probably will get an email from your bank or a letter in the mail asking you if you want to purchase one. You can refuse but most people won’t because it’s actually nice to have some money in your hand when and if you need it. A credit card can get you out of some sticky situations. For instance, you might have overspent and found yourself unable to pay the bills at the end of the month. The issue here is obvious. Now you’re in the position where you can no longer afford to pay what you owe, and this can slowly but surely push you in debt. With a credit card, you can pay on credit and then pay it back at a later point. Don’t forget this also saves you from accidentally stumbling into a nasty loan. But remember, that’s all a credit card is. It’s essentially a digital loan, and you do have to pay it back eventually.


What Do You Need To Know Buying On A Credit Card?


You need to look at what you’re going to be charged for borrowing on credit. There are two types of costs that you need to think about. The first is initial rate that you’ll need to pay on the money you borrow if you pay it back within the set time. The second is what you’ll pay if you fail to do this. You need to make sure that you don’t hit that second and always pay in the designated time. Failing to do this can lead to hefty bills and debt mounting up against you. Always check the rates you’ll be held to in both cases before you start using a credit card. 0 Interest rate credit cards sound great but if you fail to pay back what you borrowed you could be charged a thirty percent fee per month in interest!


I’ve Heard About Credit Scores…


Credit scores are how the government and society measure your borrowing behavior. Also known as a credit rating, this can be affected by how much you borrow and whether or not you pay back the cost on time. This is why credit isn’t always the nasty thing that people think. If you borrow, you can boost your credit score which will allow you to gain access to great deals on loans when, for instance, you want to buy a house. Cool right? It can also grant you access to credit cards with awesome interest rates and much more. Your credit score can either rise or fall depending on your borrowing behaviour.


Other factors can impact your credit score as well. For instance, even checking your score can change it because it suggests you’re worried.


What’s Bad Credit?


Bad credit is when your credit score is in the toilet due to borrowing money and not paying it back on time. Be aware that the size of the amount you owe may not result in a worse credit score. A 50-pound debt with a high interest could be worse than a gradually growing college loan debt of 50,000. If you have bad credit, it’s likely that you have either lived beyond your means, faced redundancy or relied too heavy on that credit card in your purse.


With a bad credit score, you can find that various aspects of your life are affected. Anyone can check your credit score including a potential employer, a landlord, a partner, a mortgage broker or a loan provider.


So, You Can’t Borrow Money With Bad Credit?


No, actually you can which is crucial because if you couldn’t some people would be in serious trouble. A lot of people in debt are unable to survive without borrowing. It is, quite literally, their only option and that’s exactly what they do using a bad credit credit card and if you go to this site, you can find more about that. It’s the tool you need to borrow when your credit is in the toilet.


Repairing Credit



Repairing your credit score is a matter of borrowing and paying back on time. You usually have to start setting up a way to clear your debts as well. They don’t have to actually be clear. You just need to show that you are making an effort with repayments. Basically, you need to clean up your finances.


There are numerous ways that you can improve your credit score, and one option would be peer to peer lending. With peer to peer lending, you borrow from an individual who will be able to take on your loan with a minimum interest so that you can easily pay it back on time without damaging your credit and instead of improving it. It really is that simple.


Credit isn’t something that will affect you when you’re young, but as you get older, it becomes increasingly important, particularly when you think about buying property or starting a family.


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