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Tuesday, December 11, 2018

College and Credit - A Students Guide

Credit, what is it and why should you care? College students are faced with enough stress dealing with classess, exams, and extra activities to put much thought into their personal credit. Many think it is a topic they don't have to worry about until after graduation. Wrong! It is during your college years that you will establish and lay the foundation of your credit history whether you realize it or not. School loans and credit card solicitations from recruiters visiting campus can greatly effect your credit score in either a positive or negative way and negative entries can stay on your credit report for 7 years! It is up to you to manage your credit responsibly now, so that your future will be as bright as you hope for after graduation.

Many students do not realize the importance of having good credit. The ability to borrow large sums of money and to pay it off in accordance with the loan terms is essential to meet current and future financial needs. Good credit means there is no late payments and that these debts are repaid according to any contract, invoice, or agreement.

How do you know where you rank? The three major credit bureaus Equifax, Experian, and Trans-Union are each obligated by Federal Law to provide you with one free copy of your credit report per year. It is up to you if you request them all at once or to request a report every four months, so that you end up at the end of the year with 1 copy from each credit bureau. Be aware that the format and some information may vary between companies. If you find a mistake on your report from Experian and called them to have the mistake corrected for example, Experian is not obligated to notify the other credit reporting agencies of the error. You must call each one individually to follow up.

Students can visit one of the credit reporting websites and request their credit score or what is called sometimes referred to as a FICO score (named after Fair, Isaac and Company) for a small fee, usually under $10. This will give you a snapshot of how you are viewed by lenders and potential creditors as of the date you requested the score. FICO scores fluctuate constantly, and may vary from month to the next based on factors like paying down credit card balances, applying for new credit, length of credit history, and any late payments. It is also possible to have a different score at each credit agency because each agency updates its records at different times of the month.

How do I know if my score is good? The FICO scores range from 300-850 with a median score being 723. The larger the number, the better your score. If you fall below the median, you should seriously consider making a goal of improving your score.

How is my information protected? Well, fear not because there are several Acts that have consumers best interests at heart. The Consumer Credit Protection (Truth in Lending) Act requires lenders to disclose both the dollar amount of finance charges and the annual percentage rate (APR) charged, as well as other loan terms and conditions. The owner of a credit card is also limited to $50 in liability per card. The Equal Credit Opportunity Act prohibits credit discrimination on the basis of sex or marital status or to ask questions regarding these and childbearing plans on loan forms.

The Fair Credit Billing Act is the most noteworthy. Under this Act, consumers must notify the creditor in writing of any billing errors within 60 days of the date they recieve the statement. Creditors have 30 days to respond and 90 days to resolve the complaint, during which time creditors may not collect the bill or issue an unfavorable credit report. Three other Acts to be aware of are the Fair Debt Collection Practices Act, the Fair Credit and Charge Card Disclosure Act, and the Consumer Credit Reporting Reform Act.

What can I do now to establish or boost my credit rating?

1> Pay your loans on time- Defaulting on a student loan can trigger income tax return withholding to satisfy outstanding debt and will take seven years to be removed from your credit history.

2> Use Credit Cards Wisely- Live within your means, don't use your card for purchases you can't pay off within the same month, and don't apply for new credit several times within a short period of time.

3> Review your Credit Reports- Be aware of any unauthorized activity or mistakes. Errors should be followed up on by contacting each credit bureau seperately through their 800 number.

Maintaining good credit doesn't have to be as involved as chem lab, but is just as important as that grade on your final. Use these tips to aid in keeping your credit in Grade A status.

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