In a recent posting, we advised college graduates to take a serious look at their social profiles with a particular focus on existing accounts with social networking sites. Now we turn our focus to credit profiles, and the relevance they play in job searches, new purchases, and house rentals or buying.

Credit is and will continue to be an integral part of our everyday lives and unfortunately, many adults, even those with business degrees, never learn the importance of maintaining and building good personal credit. The majority of students entering college are experiencing their first taste of freedom: no curfews, no daily parental guidance, and trial and error experiences that will help them grow personally and professionally. Credit card companies love college students, and enhance students’ new found independence with “free” money. It starts innocently enough, but as time goes on, students can and often do get in over their heads.

According to United College Marketing Services, on average, college students carry 2.8 credit cards with a balance of $885.   Since plastic can be deceptively easy to use, particularly when virtually anything can be purchased with a credit card – from the occasional meal at McDonalds to groceries to more extravagant purchases such as concert tickets and spring break vacations – it’s easy to understand how a small balance can quickly rise. If a student pays their bill on time, they can build a strong credit history that will benefit them in both the short and long run. But missing just one payment or simply paying a bill a few days late can have a significantly negative impact on their credit. Credit scores, the most familiar being  FICO, rate credit from “Very Poor” with a score starting at 350, to  “Excellent,”  having a  top score of 850. Credit scores are used to rate creditworthiness, including credit card balances versus credit limits, total debt, payment history, derogatory payments, and other key factors.    This score will determine the interest rate they  get on a new loan,  will weigh in on their ability to rent an apartment, to secure utilities including phone, electric, and gas, and interviewing for a job and undergoing employment background screening, a key factor in the hiring process.

Credit is important but good credit is essential. For students who are just entering school, remember to use those credit cards wisely, pay off balances each month, and charge only what is necessary. For new college graduates, while their credit history may be short, it is important to take the time to review all three credit reports from the major Credit Reporting Agencies (CRA), available for free (one time per year) at www.annualcreditreport.com.

Recent findings from the Javelin Strategy & Research 2010 Identity Fraud Survey Report revealed that younger consumers (18-24) suffer the highest fraud incident rates and take the longest time to detect fraud. Awareness of credit and personal information is key to protecting everyone’s most valuable personal asset — their identity. We strongly suggest that college students and graduates enroll in credit and public record monitoring services so they can be alerted to changes to their credit reports and to non credit information (utilities, cell phones, etc.) and respond quickly to potentially fraudulent transactions. Credit.com, IdentityGuard.com, and ITACSentinel.com provide helpful tips on credit management and identity theft protection.

It’s never too late to improve upon credit. Good financial health will save time and money both now and in the future. We encourage adults of all ages to proactively take control of their credit and personal identity. A resume personifies a person’s experience and achievements based on their own perception. A social identity is created by an individual and shaped by the virtual participation of ‘friends.’ Credit profiles and public information convey a much more pragmatic story that can have a positive or negative impact on a person’s identity and possibly result in denial of credit and employment opportunities. The good news:  it’s early enough in the credit cycle for graduates to take control of their credit and to make a difference in their future.

Related posts:

1. Footprints to a College Graduate’s Social Media Profile (Part I)
2. The IDGuardian Podcast: Episode #008 — A Victim’s Story
3. Reflections from a Black Hat Hackers’ Conference (Part Two)
4. The IDGuardian Podcast: Episode #009 — An Action Plan
5. Identity Fraud Fact: Little Guy is Big Target