Do you know your credit score? It’s just as important as your GPA, maybe even more so. And it can be the deciding factor as to whether you’ll get that car, that job or that place to live.
When you apply for credit, the lender will pull up information held by three credit bureaus. This information is tied to your social security number. Whatever credit you’ve had in the past reflects how a lender will view you today. How you handle your credit is incredibly important. Your student loan is not dischargeable if you file for bankruptcy. It will stay on your credit report forever, lowering your credit score.
The three credit bureaus are Equifax, TransUnion and Experian. If you are late or default on a loan, the credit bureau(s) are notified and your credit report is dinged. You can get a free copy of your credit report from all three agencies at http://www.ftc.gov/.
If you find a negative item on your credit report that you know is correct, call the vendor and ask for help. They’d much rather get some money than go to court and/or end up writing off the debt, so they may work with you. Plead your case politely. If the person on the other end of the phone won’t work with you, ask to speak to his or her supervisor. Get assertive. Ask for the removal of late fees, which show up on your credit report, a flag of sorts to reviewers.
The magic FICO score is 720. When you see advertisements for low rates on cars and credit cards, that offer is for people who have a FICO score of 720 or higher. If your score is lower, you will pay higher rates. Here is how you can protect yourself and your credit rating:
1) Use your bank’s automatic pay system to ensure you always pay on time. Schedule recurring payments to be made every month on the same date.
2) Talk to your bank about credit protection.
3) Keep as much credit as you can in your own name
4) Protect your identity.
5) Don’t close out credit cards – the amount of potential debt is used in the formula to calculate your debt risk. Keep all credit open, make a charge from time to time, pay it off responsibly, and keep going.
6) Ask for late fees to be reversed. Often they will do that; everyone lets a bill slip by from time to time.
Some employers won’t care about your GPA as much as they will about how you handle your personal finances, especially if you are applying for work in the financial industry. If you can’t handle your own finances, they won’t hire you to handle other people’s. Your credit rating has to be the best it can be, and you have to make sure it’s correct. Banks, Mortgage companies, law firms and other employers often check your credit rating to see how you handle your personal obligations. Make sure you present yourself just as well at the three credit bureaus as you do in person.