Credit Management
Maintaining good credit is critical for a successful future. Businesses will review a student's credit history when evaluating requests for loans, insurance, employment, and leases. Creditors may choose to grant or deny requests based on credit history. Forming good financial habits now will not only help graduate students during their college years but will help them throughout their lifetime.
Budgeting = Better Money Habits
An important part of managing your finances is to know where your money is going. Budgeting is financial goal setting that should be done on a regular basis. It may sound overwhelming; however, it can be as simple as using envelopes and putting money into each for designated expenses. To find out what you are spending, use an envelope to keep your receipts and at the end of the week, you will be able to see where your money went.
The good news is there are several apps that could work for you:
- Envelope Method App
- Excel Spreadsheet Method App
- PearBudget
- Good Budget
- Spending Tracker - Can be found in Google Play and Apple Store
Once you determine where your money is going, what expenses can you eliminate or reduce?
Consider the following:
- Recognizing the difference between needs and wants
- Living below your means
- Saving for Future Goals (Time Value of Money Now vs. Later)
- Contributing to a Retirement Fund
- Make giving a habit
What is Credit?
Credit history is a record of all credit cards, loans, and other credit obligations that a student has assumed over a period of time. It shows how much the student has borrowed (or the amount of their credit limit), the number of payments made, and whether they have met the obligations of the repayment terms. Individuals are entitled to one free credit report every year from each of the major credit-reporting agencies in the United States (Experian, Equifax, and Transunion). It is recommended that you review your credit reports every four months by pulling one free credit report from each bureau. To receive a free credit report, visit www.annualcreditreport.com.
A credit rating, or FICO score, is a numeric score that reflects one's ability to repay a loan. It is based on a number of different factors, including: credit history, current outstanding debt, payment history, types of credit, places, and the number of times one has applied for credit, overextension of credit lines, and bankruptcy. To learn more about FICO scores, visit www.myfico.com.
Additional Resources:
Using your Credit Card Wisely - Mapping your Future
Why is Good Credit so Important