No one wants to ruin their credit, but students who have never handled credit before find it easy to do.

Abusing easy credit.

Students can easily get approved for one or more credit cards, and then spend themselves into a hole by graduation — often on top of tens of thousands of dollars in student loans.

College students are profitable targets because they’re more likely to get high-earning jobs down the road and become loyal credit customers. If they do fall behind, parents often absorb the heavy interest hit.

Missing payments.

Skipping a payment is worse than paying the minimum. The interest compounds, and a “30 days late” notation shows up in your credit report. Missed payments will hang around on a credit report for seven years.

Paying bills late.

Even if a credit card account is paid faithfully, the issuer can opt to hike its interest rate if a cardholder has made late payments on other bills, such as car loans, utility bills and other credit cards. This is called universal default.

Conclusion

In a perfect world, I would hope that we don’t all have to learn from the school of hard knocks. I have suggested that financial literacy needs to be a prerequisite for graduating. However, the big banking cartel wouldn’t allow that, so your next best option is to learn the rules to the game.

Agree? Disagree? I would love to hear your thoughts. And if you enjoyed reading this,share it with a friend. It would mean a lot to me. ☺

This post was originally shared on Medium during the summer of 2016.