It’s that time of year again – back-to-school. College students across the country are looking forward to the chance to gain independence both academically and financially. However, the decisions made at this juncture can have a serious impact on the future creditworthiness of college students who get in too deep with credit cards and loans. So how best to teach your college student to be a financially responsible adult? There are no easy answers, but there are some things that you can do to help your college student understand the role of good credit.

• Avoid multiple credit card accounts – students who rely heavily on credit cards may find themselves in over their head with debt well before graduation. Instead of credit cards, consider using debit cards with a Visa or MasterCard logo, or prepaid cash cards. These provide the freedom necessary to purchase supplies without having a negative impact on credit. Exception: if your college student has job, you may wish to allow one credit card with a low credit limit that can be repaid steadily. This will allow your student to build a solid history of payment without the risk of racking up too much debt.
• Don’t take on excessive student loans – student loans can quickly add up over the course of a four-year degree. While they can be necessary to cover such things as books, food, clothing, and school supplies, student loans should not be used to finance excessive or frivolous spending. Some students have a problem with understanding that student loans will have to be repaid; you can help your student to understand the impact of future interest rates and the cost that they will pay if you clearly outline exactly how much interest will be paid back with each loan compared with the amount of money they are receiving now.
• Encourage budgeting – help your college student create a budget and stick to it. By providing clearly defined guidelines and goals, you can help your college student avoid the path of problem credit. Unless it’s an emergency, don’t bale your student out if he or she goes over budget. By having to confront the negative consequences of financial irresponsibility, your student will learn the importance of keeping within proper financial guidelines.

But what to do if credit is already a problem for your college student? Credit repair services may be able to help your student if the debt is severe. However, you should not let these problems linger as having problem credit early on can make employment opportunities more difficult to come by. Problem credit can also have an adverse effect on some insurance rates, so be certain to handle the problem as soon as you are made aware of it. The earlier these types of problems are taking care of, the better your student’s chances of having an excellent credit rating when the time comes to make a major purchase such as a car or home. It’s never too soon to learn the value of good credit and financial responsibility. If you help your student learn the proper role of credit and how to manage spending wisely, you are setting him down the path to financial success and stability.