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How to manage credit after college graduation
According to Money Magazine, commencement should include speeches on the wisdom of saving, sticking to a budget and managing credit well. If used responsibly, credit cards can be an effective tool without accumulating debt. - photo by Megan McNulty
For college graduates, commencement means receiving your diploma and entering your professional career.

It also includes a ceremony with speeches, which Money Magazine's Dan Kadlec said should not just inspire graduates to achieve their dreams but also address the wisdom of saving, sticking to a budget and managing credit well.

"Few life lessons would have more lasting personal impact," he wrote.

In a report on the importance of a credit score, U.S. News observed: "A high GPA might open the door to academic opportunities, but a high credit score will keep more cash in your wallet. This is much more important once youve left school behind."

Billionaire investor Warren Buffet advises young people avoid credit cards altogether.

Interest rates are very high on credit cards. Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, Id be broke," he said in a report published in the Las Vegas Review-Journal.

Buffet saved $10,000 by the time he graduated college. He said this money was more important than the billions he made later in life because it helped him get ahead and avoid post-graduate debt.

Avoiding credit cards is possible by using debit cards and apps like Venmo. Venmo is an app recently released in 2009 and allows individuals to transfer money back and forth via mobile device. If drawing from a credit card instead of Venmo reserves or a bank account, Venmo charges a 2.9 percent interest rate. In January, Venmo processed 1 billion transfers, according to Fortune.

The drawback to not using credit cards is that it can be difficult to establish a credit score, which is essential to qualify for mortgages, car loans or borrow for other expensive assets.

"To have good credit, you need a record of on-time debt payments. If youve never had to make such payments, you dont have good credit you have no credit," according to Nerd Wallet.

If you have no debt, putting some regular expenses on your credit card can be beneficial as long as you are sure to pay it off each month, Nerd Wallet reports. Your payment history makes up 35 percent of your credit score.

But never treat a credit card like a debit card, which acts like cash since funds are immediately withdrawn when the card is used. Keep your credit card balance low enough to pay it off each month and track your spending, according to Nerd Wallet.
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