Students have many Options to Avoid Bad Credit

At the beginning of the school term on most college campuses, credit companies are set up and on the prowl. Students across the nation are both overly cautious of the creditors and willing to sign up. The rate at which students are signing up though is not that steep, as students, both undergraduate and graduate account for twenty-five percent of the consumers in debt.

Bad Credit is becoming a normality among the younger generation, which has easier access to credit cards and credit options. Only three decades ago, it was impossible for anyone under the age of twenty-two to get a credit card without getting co-signed by their parents or someone with credit already established who could vouch for them.

Today, most college students have the option of signing up for credit cards as soon as they step on college campuses. While some colleges ban creditors from setting up, many have alliances with bankers who offer credit and allow them access to students and student information. However, whatever the method in which students are introduced to creditors, they are taking advantage of its benefits.

According to Nellie Mae, the leading student loan lender in the nation, most undergraduate students have an average debt of $2,200 while graduate students have an average debt of $5,800. Credit Cards are good to have in the event of emergencies or minor purchases, but time and time again, the emergency for college students end up being the latest trendy wardrobe and other items that prove to be liabilities.

Howard University junior student Hubert Smith III says ” I have a credit card, but I only use it to buy plane tickets home; my mother pays off the credit card. But other than that, the only debt I have is student loans.”

With talk of credit debt, the real question is what can be bought once one’s credit has gone bad? Because so many students and adults face credit debt, it is becoming easier to work out what one can purchase with a bad credit history.

First, it is important to know that all major purchases such as cars and houses require that the buyer have established credit. So how does one get credit after their credit has been damaged in the past? Research is important in discovering which card works best, but there are credit cards designed specifically for people with damaged credit. There are pre-paid credit cards that operate much like regular credit cards that build credit; however they are pre-paid to divert the stress of keeping up payments. There are still traditional credit cards that assist in building credit because they usually report to three or more major credit bureaus every month to update status and credit score.

Another option to consider is a consolidation firm that allows the debt ridden person to take out a loan to cover all other debt while securing lower and fixed interest rates. Usually the consolidating company works out agreements with the credit companies to keep the interest rates low for their customers.

The downside to consolidating is that while the person is decreasing the amount of debt overall, after everything is finished being paid off; the person still has the loan that they owe to the consolidation firm. The loan needs to be paid off as well as the fact that the consolidation firm must get that monthly payment in order to help the person, and some consolidation firms put the customers on monthly budget to help assist in money managing and payments.

Second, after someone’s credit has been damaged, is it still possible to purchase cars? This question is somewhat tricky when there are dealerships that offer the opportunity to purchase cars with no credit checks. However, this is commonly misconstrued and simply not true if one ever decides to partake in this idea. Every car dealership, unless they are a pay-here dealer, will check credit.

However, there are dealers who will check credit and still work with customers with bad credit to get them the service they desire. Other dealers will simply turn away the person if their credit is bad or even sketchy. Now there are pay-here dealers who allow the customer to purchase a car, but that comes with a steep expense. Usually the person must pay at the dealership every week and end up paying more that the car is worth. The best option is probably to find a dealership in the area or close to the area in which one lives that is willing to work with the person to get the purchase handled in a sufficient manner for both parties.

The last and biggest question is can someone buy a house with bad credit? This question is probably the biggest because most Americans aspire to own there own home at some point in their life and because, even people with good credit have trouble buying homes. The average American has about $8,000 dollars worth of debt, but a credit score of 720 or higher is what it takes to fall into the best group for the best lending opportunities. But the good news is, even with bad credit it is possible to get a loan to buy a house. While the interest on the loan won’t be the lowest possible, it won’t be the worst possible situation with home loan interest rates reaching a 40-year low. It is also in discussion amongst the Federal Housing Authority to allow loaners to give one hundred percent loan financing.

With all the operations available that allow people with bad credit to still live and thrive in society, it is possible to live a somewhat normal life with bad credit. However ideally, people still decide to deviate from ever getting into financial debt or trouble. As the awareness of debt issues are being spread amongst the younger generation, many students and young adults decide to just prolong debt as long as possible.

“I don’t have a credit card and I plan not to get one for as long as I can. Credit Card is just like asking for debt” says Howard sophomore Mo’ Sade Edwards. Another Howard sophomore, Theodore Graves says, “I don’t have a credit card, I have a debit, and I try not to even use that because I have self control issues.”

College students not getting credit cards until it is absolutely necessary is becoming the ideal option for students and young adults alike to stay debt free.