Credit-Management Tips for Recent College Graduates

Creating a plan to pay off credit card debt and stay on top of student loan payments can position you for financial success.

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The summer after graduation is a crucial time for college graduates to adjust their budgets and make some important financial decisions. Transitioning into the work world, earning a steady paycheck and changing your lifestyle as a young adult can have an impact on your financial future. Creating a plan to pay off credit card debt, as well as minimize credit card use, can position you for financial success.

Here are five credit-management tips to get you started:

1. Check your credit report. You're entitled to one free credit report every 12 months at www.annualcreditreport.com. Take the time to check the report for errors, and contact the appropriate parties to make corrections if needed. Keep in mind your credit history is not only used by mortgage lenders and credit card issuers but also used by a number of employers when screening job applicants.

2. Use credit cards minimally. Even if you relied on credit cards during college to pay for tuition, books or everyday expenses, now is the time to break the habit. As you start your new career and are busy taking care of other responsibilities, tacking on more credit card debt can make your early 20s that much more stressful. As such, create a realistic spending plan that involves paying for most items with cash. Don't turn to credit cards to pay for luxury expenses such as vacations, a new computer or other big-ticket items. However, keep one credit card in your wallet for emergencies, and charge a small purchase to the card every four or five months, as some creditors close accounts if a customer's card is inactive for a long period of time.

3. Create a debt payoff plan. If you're like many college graduates, you're juggling credit card debt and student loan debt. If student loan payments have you overwhelmed, consider loan consolidation options, by which you create a payoff plan based on your current income and can start whittling down your student loan debt as soon as possible. Neglecting to budget for these payments will set you back financially in the long term, and could leave you stuck in debt for several years.

4. Recognize credit traps that are in disguise. “Would you like to open a credit card with us today? You'll save 15 percent on your purchase.” You may hear such an offer when checking out at your favorite electronics store. These may promise short-term gains but aren't typically good credit card offers. Do your homework, and read the fine print so you fully understand the terms and conditions. Consider what the rates are after the promotional period ends and if there are any extra processing or account maintenance fees involved.

5. Design a bill payment schedule. Paying your bills on time can help you maintain good credit and establish a solid credit history. Create a calendar or bill payment schedule so you don't miss a payment. Keep in mind even a single missed payment can show up on your credit report, which may lower your credit score. Stay on top of due dates for your monthly bills, and make those payments at least six to seven business days in advance to ensure the payments are processed on time.

Sabah Karimi is an award-winning columnist at Yahoo and life hack blog WiseBread.com. Find more financial tips and life hacks for recent college graduates at Wise Bread's New Graduate Help Center.