The Managing Your Credit Brochure creates awareness for students about different types of credit. Establishing and maintaining good credit can provide many benefits to your financial future. Good credit can help you obtain a car or home loan, a lease on a rental property, and even in some cases a desireable job. While balancing school expenses with the more day-to-day expenses of transportation, food, and shelter can be a challenge, maintaining good credit while in school is one of the most important things you can do for your financial future.
Your Credit Report
When you apply for a credit card, a student loan, a car loan, a personal loan, or a mortgage, the financial institution lending you the money wants to know your credit risk level. Your risk level tells the financial lender how likely it is that you will repay a loan in a timely fashion.When a lender reviews your credit background to determine how much credit, if any, to grant you, they usually look for “The Three Cs”: character, capacity,and capital.
“Character” summarizes a lender’s sense of how responsibly you handle credit obligations. Character is established over a long period of time and is contingent upon whether you promptly pay the principal and interest on your mortgage, student loans, credit cards, or other debts. The lender needs to see a “good-faith” effort to repay your bills and debts in a timely fashion.
“Capacity” is defined as the financial ability to assume a certain amount of debt. This is why on your student loan application or other loan applications they want to know your income, type of employment, savings, and investments.
“Capital” consists of the financial assets at your disposal to pay off debt if your character and capacity do not prove sufficient. This might be your car, home, stocks, bonds, mutual funds, etc.
Credit Reports and Credit Reporting Agencies
Landlords, banks, potential employers, and credit card companies may
request a copy of your credit report in order to access your credit score and other data about your accounts. By federal law, your credit report cannot contain information on your medical history, race, gender, religion, national origin, or political affiliations.
In order to know what others see on your credit report, it’s important to request and evaluate your own credit report at least once a year.
There are three major credit reporting agencies, and you can obtain a copy of your credit report once a year at no charge in all 50 states.
See www.annualcreditreport.com for detailed information by state on how to obtain a copy of your credit report. You may also contact the three major national credit reporting agencies by visiting their websites or calling the toll-free numbers listed below.
www.equifax.com
www.experian.com
www.transunion.com
Equifax toll-free at 1-800-685-1111
Experian toll-free at 1-888-397-3742
TransUnion toll-free at 1-877-322-8228
Additional Resources:
 Click Here to view: Credit Report Training Guide
Click Here to view: Consequences of Default
Click Here to view: Testing Your Financial Situation
 Click Here to view: Prevent Identity Theft
http://www.bankrate.com/brm/default.asp - This is a complete website that provides up to date information about rates for mortgages, cars, insurance, credit cards, investing and savings.
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