While it would be great if all parents could pay for their children’s college education, sometimes that’s just not realistic or financially viable. There are some parents who don’t want to contribute, because they feel that by having their children pay their own way to obtaining an education, it will help them to “grow up.” There are others, of course, who simply can’t afford to pay their kids’ way through higher education.
No matter what category prospective students fall into, they need to be prepared to apply for loans, which are even more difficult to obtain as an undergraduate without having them co-signed by a parent.
What’s a cosigner? This is someone who commits to picking up the slack if you don’t make payments—and someone with reputable credit of his or her own. So, in light of that fact, how do students go about ensuring that their credit scores are up to par to aid in the process of paying for college on their own?
Pay Down Credit Cards
This might seem like a no-brainer, but many people in severe credit trouble seem to forget it when the balances are sky-high on more than one card. When possible, focus on paying down debt before anything else. Turning to services such as National Debt Relief can assist in finding the best method to paying down debt. At the very least, it’s essential to make minimum payments each month and add something toward the principal balance on any credit card.
If affording to pay credit card bills each month is increasingly difficult, start by paying the minimum on each card, and add to the payment on cards with the highest interest rates. It’s always vital to pay down credit bills on cards with balances that are more than 30 days past due first. Paying bills on time or paying bills off completely are fantastic ways to improve a credit score, with a number around 700 being something to aim for.
Get a Copy of Your Credit Report
Credit card companies do make mistakes, and obtaining a credit report is the best way to ensure that a credit score is correct. Credit reports are calculated and made available through several different services and should be checked annually. Charges can’t be disputed, nor can debt be paid down until a true and factual credit score is produced.
Payment Reminders and Automated Payments
The more credit cards that are in a student’s possession, the harder it can be to remember when payments are due. To avoid late fees, set up payment reminders. Many online banking services will allow a customer to input the date that bills are due, and they’ll even send out a reminder 24 or 48 hours before the bill is due.
If reminders don’t work, automated payments may be the next best thing. Though a minimum amount per month must be paid, an account holder can change the amount paid per month. Ideally, that minimum should be the minimum payment on the card plus the percentage of the principal that is reasonable for the account holder to pay on a consistent basis.
Don’t Keep Spending
If the balance can be paid down on one or two open credit cards, this doesn’t mean that the holder should immediately start spending on those cards just because they have available funds. Instead, save that money, and work on paying down the balances on other credit cards first, or apply more money toward the principal balance on cards with high interest rates.
If a big-ticket purchase absolutely must be made while trying to pay down credit card debt for things like car repair, try to do it in cash. Winding up in trouble with the same credit card more than once is something to avoid at all costs.
Charge Less
Many people wonder how much they should be charging on their credit cards. Of course, charging what can only be paid in full at the end of each billing cycle is what to aim for, but as a general rule of thumb, it’s best to try to only use roughly 30 percent of your credit limit on each card. The 30 percent rule will also help account holders and students to figure out how much they need to pay down to get out of credit card debt and raise their score.
Ask for Late Payment Assistance
Credit card companies definitely play by the numbers, but some will offer leniency for customers who have been with them for a considerable amount of time and have mostly paid their bills on time. If this applies to you, consider asking a credit card company to drop late payment charges.
Getting rid of one or two late payment charges on a card that’s been held for years will allow a holder to put more money toward paying down the principal balance, which will help to raise the credit score.
Consider Balance Transfers
If a credit card has a very high interest rate—or is forcing a penalty rate, because the card’s limit has been succeeded—balance transfers can be a solution. When considering transferring your balance from an existing card to a new card, make sure that the interest rate is lower on the new card.
Transferring the balance of an old card to a new one with a higher interest rate doesn’t make much sense and causes the account holder to pay more in the long run. Also make sure to pay the minimum payment on a new card before completing a balance transfer. If the minimum payment can’t be met, opening up a new account might actually hurt a credit score more than leaving the balance on the old card.
Most importantly, though: pay off the card before the final due date!
If a student or cardholder doesn’t pay off the balance transfer by the last month’s due date with zero percent APR, then all of those months of no interest will suddenly show up and be added to the bill. So, if enacting a balance transfer, set up a payment plan: the credit card company will NOT do it for you.
Hire a Service to Help You
A lot of people think that if they just buckle down and control their spending, then they will be able to get out of credit card debt in no time. While this method of thinking is commendable and limiting spending is essential, there are things that people simply can’t do on their own.
Credit scores are computed using pretty technical formulas, and people may not be able to figure out what they need to pay down, and in what order to do so, all on their own. Hiring a credit service to help figure out the best way to raise a score is often the fastest means to getting out of debt.
Good Luck!
It’s a bigger struggle for some than others, but rest assured that there are ways of paying for school. If prospective students feel as though they’re really in trouble, stop by a financial aid office on campus and get advice from them. They are there to guide and help students on their financial journey through school.
Virginia Cunningham is a finance, business and tech blogger who has been advising and writing on personal finance issues for several years and has contributed to a variety of publications.
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