For many young adults, leaving home for college is an important and fun time. It’s time to get out on your own and begin forging your own path in life.
One such path many of us forge is establishing our own credit. This includes credit cards and the applications start coming in once we reach 18.
Are credit cards and loans part of life?
“Absolutely,” said Tony Nierman, Branch Manager of B&L Bank. “Unless you have a stack of money, major purchases like cars and homes are impossible to buy without good credit.”
He added that there are a couple of ways to start out with credit.
Some of the best ways to start out with credit, he said, is to purchase a car with a cosigner or get a department store card.
“I got a Helzberg card with the intention of getting a necklace that day,” said Derek Zarda of Odessa, Mo. “I had my Discover card for a few months when my laptop died, and I used it to buy a new one.”
“Going crazy with it” is a mistake that a lot of students make, added Nierman. “Don’t overextend yourself,” he warned.
He advised that if students get in trouble or get in over their head to let creditors know before the bill is past due. A lot of students only work part-time, so go to a parent or grandparent to get help.
Rachel Gassen of Odessa, Mo., found herself going crazy with it.
“In the beginning, my plan was easy to follow, but as time went on, it became easier to for things that just came up,” she said.
The same with Deborah Nelson of Ashland, Mo.
“I treated it as free money,” Nelson recalled.  “I got to the point that I couldn’t make minimum payments.”
It’s a necessity to have a credit card – “for emergencies” cautions Nierman. You can’t be stranded on the side of the road and not be able to get a tow truck while your parents live hours away.
Make sure you can handle the debt, not letting total debt get over 35 – 36 percent of your income.
Nierman’s advice?
“Don’t overextend yourself. Live within your means.”
Otherwise, he said, you’ll find yourself in financial trouble that can last for years before it’s fixed.
Tony Lear, a bartender in Kansas City, Mo., learned the hard way.
“I was an authorized user of my mom’s card,” he explained.  “Because of my spending, my mom ended up having to file bankruptcy. Remember that you’re not the one that pays the price.”
Nelson learned the hard way and filed bankruptcy, and Jennifer Hannel of Odessa, Mo., found herself in a similar situation.
“[I] borrowed money from family who had a much lower interest rate,” she said. “Eventually, after many stupid decisions, I filed for bankruptcy.”
Capital One offers student credit cards and their customer service representatives recommend all students check out their financial education section of their website.
Bankruptcy has long-lasting implications for your credit and will stay on your credit report for 7 to 10 years, which makes it harder for you to borrow money and seriously impacts your financial reputation.
Remember, in addition to banks, landlords, employers, and others can—and often do—look at your credit score.