Plastic and the Graduate -- How to Establish and Maintain Good Credit Records

Get only one card with a low credit limit, starting at $300 to $500, and shop around for the lowest interest rate.

Pay off the entire balance monthly, or at least pay more than the monthly minimum

Record every purchase in your checkbook, so you know the money's in your account

Don't charge food or entertainment

A secured card can reduce risks. You can only charge up to the amount you deposit as security at the issuing bank. Interest rates are as low as 8%, or half the rates for unsecured cards.

Parents can limit their risk by co-signing as the primary borrower on the card.

Parents get the bills and their children establish good credit

Establish a good credit and holding on to it

In years past, paying with cash was a sign of success and stability. Today, credit is now considered King in America. Good credit, more exactly a good credit rating is needed to live the good life - it's necessary to buy a home, to get a good job, get certain types of educational loans or a preferred rate on a homeowner's or life insurance policy.

Establishing good credit is one of the easiest and most important financial tasks young people, especially college students must face. There is little preparation for this task, therefore its even easier to make mistakes that are reflected as poor credit ratings.

To establish good credit while in school, start with one major credit card, such as American Express, MasterCard, Visa or Discover and pay the bill on time. Remember on time means that the payment is received on or before the due date. Paying even a few days late puts you in a different category. The same is true with other obligations such as your car payment and the mortgage payment. Most car payments and mortgages offer a grace period of 10 or 15 days after the due date before your payment is officially late and you're charged a late fee. But for scoring purposes, if you have not paid by your due date, you are late.

After graduation, for credit scoring purposes, you may own two to four credit cards. This does not mean that you must carry a balance on them all. According to most scoring systems, having less or more is bad. Again, remember to pay the bill on time. On time payment is so important to the credit scoring system you should strive to make sure payments are received well before the due date.

Credit issuers have broad latitude to develop their scores based on their experience, provided they do not discriminate against people because of their sex, race, age, religion or national origin. A credit issuer may use age as a criterion of a scoring system if, for example, past experience shows that those in a certain age group are less likely to pay their bills. A lender's experience in issuing credit is what is translated into a credit scoring system. Each lender's may have variations that weight the formula for determining the credit score.

In general the following characteristics will help you get a higher score:

Everyone should review their credit history on a regular basis. If the report contains errors, write to the credit bureau immediately. Explain the situation being as specific and detailed as possible.You may also wish to write directly to the creditor as well to expedite resolution. Once the matter is cleared up, ask the creditor to write the credit agency with the corrected information.

Understanding how the credit scoring system works will enable you to manage your financial life more efficiently and effectively. In other words, you can get the system to work for you to achieve the success you want.