How to be a smart borrower

Taking out loans is a big responsibility. You're promising to repay thousands of dollars, all while you're trying to get an education and set a foundation to begin a career. Students must realize that loans are serious business. By taking out a student loan or participating in private loan debt consolidation, you are establishing a life-long credit history. Smart students use their loans and manage their debt appropriately, and begin establishing smart money-management skills early on in the process. Be sure to follow these tips to remain a smart borrower, and one with a fantastic credit history:

• Know Your Balances: It might sound odd at this stage, needing to figure out who you owe. But as time goes on, it can be easy to forget where your money goes and what your balances might be. Keep track of all your debts: loans and credit cards. Stay aware of changes in interest rates, due dates or terms.

• Keep Your Records: Monitor your expenses. Whether it's a payment coupon or a statement, retain receipts associated with your debts. Setting up a pattern like this begins a smart habit of monitoring finances. Consider tracking your expenses so you can determine which expenses might be unnecessary - how much do you really spend on coffee each month? You'll find this is an easy way to begin saving instead of spending.

• Pay on Time: Always pay your bills by the due date, always. Past-due payments are reported to credit agencies, which will hurt your credit scores. The consequences of missing a payment are too strong. If you cannot make a payment, call your lender first to see if there are any alternatives for the short term. Never assume your lenders will simply ignore your forgetfulness.

• Monitor Your Credit: Smart consumers check their credit scores every year to make sure the data on file is accurate. Any incorrect information could hamper efforts to take out a loan later on. If you notice anything incorrect - whether it's your name spelled incorrectly or a lender you don't recognize - immediately report the problem. You could be a victim of identity theft.

• Get a Savings Account: Open a savings account and make automatic monthly deposits. You'll soon find that your savings can grow quickly, and perhaps you can make a big purchase - such as a new TV - by using cash instead of credit.

• Borrow Only What You Can Afford: This could be the hardest rule to follow. Borrowing more than you can afford results in mounting debt. Adhere to a budget so you'll be saving instead of borrowing. Know that every loan purchase made on a credit card, must be repaid with interest.

• If you have any questions, they may be answered in our frequently asked questions.