High School Graduates and Department Store Credit Cards

Your Credit Score

Your credit score says a lot about you. Mis-managing your credit at a young age can have long-term ramifications. The ability to secure financing for a mortgage, new car or to start a new business is based upon your credit score.

A credit score is based upon the reported information of companies that extend credit. Each month your payment information is recorded and reported to the major credit bureaus. Details such as on-time payments, missed payments, and the total amount of each payment are included in your credit report.

Money Management

Many young people sign up for more credit cards than they can manage. While the payments may be low, having many credit cards with low payments may be difficult to manage. Before a high school graduate and department store credit cards collide, it is important for them to remember that an average monthly credit card payment is usually ten to twenty percent of the balance. Add up all of your current minimum monthly payments to determine if you should apply for another credit card.

If you are unable to make your payments, it will have a negative impact on your credit score. While that may not mean much to a young person now, several years down the line it may be the reason you can’t get a loan for the car or house of your dreams.

High School Graduates and Department Store Credit Cards

Each year on college campuses, major credit card and local department store credit card representatives set up information tables. This usually occurs during the first several weeks of school. Since new college students rarely have a credit history, it is easy for them to obtain credit cards such as American Express, Visa and MasterCard. Once a student has a major credit card, department store credit departments will usually authorize a credit card with a low limit.

For students that have never learned how to manage their money, this can create a problem. If the student doesn’t work or has a low paying job, they may not be able to make their monthly payments. The trouble really begins when the collection calls start and the student begins to feel the pressure of not being able to pay their bills.

Repairing Credit

For many students who accidentally fall into the credit card quagmire, there is help. It is best to seek help before credit card bills become seriously past due. Credit can be repaired if a student seeks help early.

Debt Consolidation

Students that have gotten in over their heads in credit card debt can consolidate their payments with the help of non-profit agencies. Consumer Credit Counseling has offices in many major cities and their services can also be utilized online. Non-profit agencies will help students lower their monthly payments, help them regain their credit and teach them how to budget their income. For some college students, this may be their first lesson in personal finance.

Closing Accounts

It may be easier for some high school graduates to close their accounts when they find they are spending too much money. Closed accounts can usually be opened again later. Even if an account is closed, on-time payments still must be made for the remaining balance.

Bankruptcy

Bankruptcy is always a last resort for individuals that have gotten in over their heads with credit cards. Most lawyers will advise a young client to exercise every other avenue in paying off the balances on their credit cards before filing for bankruptcy. A bankruptcy will remain on your credit report for at least ten years and it has a serious adverse affect on your credit score. Additionally, it is becoming increasingly difficult for students to have a bankruptcy granted, even if they file for one. Unless there is an important underlying reason why the credit cards cannot be paid off, such as permanent disability, a bankruptcy judge may not grant one.

Conclusion

Carefully guard your credit score so you don’t adversely affect your ability to enjoy the good things in life. No one wants to be harassed by credit collectors or forced to file for bankruptcy. By being selective about the credit cards you apply for, you can enjoy a stress-free life and have a credit score that other people are envious of.