5 Ways Young Adults Ruin Their CreditIn most cases, good credit can go further than cash on hand.  But on the flip side, bad credit can hurt you even if you have some cash as a down or partial payment.

To most financiers, credit is merely a synonym for trust.  And if you prove yourself unworthy of credit by failing to reimburse the financiers who trust you to do so, it can only hurt your pocket in the long run.

For many young adults, the importance of good credit is not realized early enough to avoid the most typical pitfalls that credit cards and freedom of finance may present.

Thus, MSN Money has created a list of 5 ways young adults ruin their credit, so readers can avoid making the same financial mistakes.

Key takeaways from MSN’s list of credit don’ts include:

  • Charge it to the max – Initially, the excitement over getting your first credit card may inspire you to test your spending abilities.  However, the credit limit on your credit card is not a spending goal to reach, it’s moreover a number representative of how much financiers trust you to reimburse.  Reaching and exceeding this limit without proper repayment, can not only lower your credit limit on cards you get approved for in the future, it can also hurt your chances of getting approved at all in the future.
  • Miss due dates – If you miss payment due dates, you’re essentially telling your financier that you’re unworthy of a line of credit.  It’s that simple.  In some cases such as financial hardship, a financier may extend a payment due date (without penalties) if you call ahead of the due date and make arrangements.  But for the most part, missing payment due dates will surely lower your credit score.
  • Co-sign a loan – We have all been young and in love before.  However, take it from me, mixing romance and finances is more of a toxic elixir than a love potion.  I learned this lesson the hard way when my girlfriend lived in Rhode Island as a student athlete at Brown, while I lived as a student in Chicago.  At the time, I wanted a new cell phone more than anything, but I didn’t have any credit because I was a struggling student.  My girlfriend co-signed for my cell phone, but I had no idea that the long distance fees (among others) would amount to a bill that was more than a $1000 for my first month.  Needless to say, it took me longer than a month to pay off the balance, and my girlfriend’s credit took a hit as a result. 
  • Collect numerous credit cards – It’s not a good long-term financial decision to apply for a credit card every time you hear “open up a new credit account with us and save 10 percent today.” Ten percent is simply too small a discount to use as a basis for making a long-term financial decision such as adding a credit card. 
  • Blow off other bills – Your credit score is a snapshot of your entire non-cash spending history, not just your credit repaying history.  For this reason, it’s important that you don’t blow off your other bills trying to stay current on your credit card bills, because only paying a portion of your bills will hurt your credit score.

As a young adult, you have the time and potential to build a strong credit score, so don’t become a victim of the pitfalls listed above.

To read the full article about “5 ways young adults ruin their credit,” head over to MSN Money.

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