By Kathryn Bossler
GreenPath Personal Finance Counselor
Spring college graduates are currently basking in the glory of wrapping up their degrees this month. However, in many instances, their downtime will be short-lived, as they face even more responsibilities, ranging from landing that first job to preparing to start paying off their student loans.
Graduates need to realize how much an impact their credit history can have on their future. As more hiring departments take personal finances into consideration, recent college graduates need to make sure their credit and debts are in order.
To help make the transition from college to the work world go smoothly, I've put together a "Top Ten" financial checklist for recent college graduates.
1. If you do not already have a job lined up, contact your student loan servicer(s) immediately to ask for a six-month deferment. Most loans will do this for you right after you graduate without much difficulty. The last thing you want is to start getting negative marks on your credit right away for not making the student loan payments on time.
2. Pull a free copy of your credit report at www.annualcreditreport.com and review it to make sure you are aware of all your existing creditors and debts.
3. Look for credit cards that you may have opened while in college and consider closing accounts that you do not plan on using, to help limit your exposure to identity theft. However, keep in mind that it is good to maintain at least one active credit card account, which you use and pay in full every month, to build your credit score.
4. If a prospective employer requests a copy of your credit as part of the application process, be prepared to be up-front about any negative marks on your credit. Employers will want to know that you are aware of the negative marks and that you have a plan for dealing with it. You can also add a personal statement to your credit report, to explain the circumstances behind any negative marks on your report.
5. Check with the registrar’s office at your school to make sure you do not owe anything to the school (library fines, parking tickets, etc.). Sometimes these debts can cause the school to withhold your diploma, until they are paid.
6. If you are moving after graduation, be sure to let the post office and your creditors know of your new address. Otherwise, you may miss important statements or letters regarding your student loan, credit cards, or other debt, and that can lead to missing payments and negative marks on your credit report.
7. Keep your expenses as low as possible while you are getting started. Don’t rush out and buy a new car within two weeks of your first job offer. Don’t feel the need to take on larger expenses in your budget such as an apartment of your own right away. Staying with your old roommates or parents for a period of time can really pay off.
8. Develop a budget – your spending plan – early on. Decide how much you’ll spend in different areas including groceries, dining out, and clothing. Once you begin receiving a paycheck, it is likely that you’ll have more income than you’ve ever had before. But it can be very easy to quickly wind up with the cash slipping away, without a clear idea of where it has gone.
9. Once you land that first job, start to develop good saving habits. Start a direct deposit into savings. Sign up for your employer’s retirement plan – especially if there’s a match. In addition, if you’re carrying credit card debt, begin aggressively reducing those balances to minimize the amount of interest you’re paying.
10. Speak with a non-profit credit counseling agency, if you are paying high interest rates on your credit cards, if you’re struggling with the amount of your minimum payments on credit cards, or if you need help in developing a game-plan for your finances. These agencies will help you develop a budget and action plan to tackle your debt. Log on to www.greenpath.org, the National Foundation for Credit Counseling at www.nfcc.org or the Financial Counseling Association of America at www.FCAA.org, for more information.
Good luck to all graduates this year!