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Your Credit Score: the 3-Digit Number

A 3-digit number affects your financial life significantly. This number is called a credit score. A credit score shows your creditworthiness, and it also indicates the possibility that you will not pay your bills. Different lenders use different scoring formulas to create credit scores, so your score can vary from lender to lender. Most scores range from 300 – 850, but you should have a credit score goal of at least 700.

A good credit score brings you several benefits. Some of the benefits include:
• Low interest rate on credit cards and loans. Interest is charged when you borrow money, and so the interest rate is tied to the cost of loans. With a high credit score, you will be qualified for the best interest rate.
• Higher chance to get loans and credit cards approved.
• Get higher credit limits.
• Better auto insurance rate.

Some tips to achieve and maintain a good credit score include:
• Pay your bills on time. One way to do this is to set up automatic payments at creditors’ websites or from your bank’s website. Pay more than the minimum payment if you have the ability to do so.
• Don’t get too close to your credit limit. If you use too much of your total credit line, you will hurt your credit score. Keep your credit utilization ratio less than 30%.
• Don’t apply for too many credit accounts in a short time, otherwise it will affect your credit score negatively.
• The longer the credit history, the better. The longer time you have credit in your name, the more experienced you are, and the more information creditors have to determine whether you can take care of your finances.
• Get your free credit report every year. You can get three credit reports each year at www.annualcreditreport.com . It is necessary for you to read through your credit report to ensure your information is correct and to verify that you have not been a victim of identity theft.

When you have a low or nonexistent credit score, you will get higher interest rates on loans if you are approved, which are more costly in the long run. When you apply for jobs, many companies perform background checks as a part of the interview process and they are going to check your credit. Some companies also check your credit history when you are considered for promotions.

To check your credit score for free go to www.creditkarma.com. If you would like to meet with a financial counselor to discuss your credit report or score, simply request a free and confidential appointment at www.ksu.edu/pfc.

Lei Cao
Peer Counselor I
Powercat Financial Counseling
www.ksu.edu/pfc

Credit-bility

Credit is an important part of your financial history. Whether you are interested in purchasing a car, a home, or even applying for a job, credit can either work for you or against you. Many people know that it is important to have good credit, but they aren’t exactly sure how to start establishing it.
Here is some general information that will be helpful as you strive to build good credit.

There are two ways in which your credit is measured- a credit report and a credit score:

Credit Report: There are 3 credit bureaus (Experian, Equifax, and TransUnion) in existence, which track your information regarding your credit. Institutions such as banks, credit card companies, your student loan servicer, etc., will send information to credit bureaus (not necessarily all of them) regarding your payment history, how much you borrowed, the number of credit accounts you have, and more. All of this information (good and bad), including a lot of your personal information, is on this report. A free annual copy of each report can be obtained at https://www.annualcreditreport.com/cra/index.jsp

Credit Score: The credit bureaus assign you a score ranging from 350-850, with 350 being terrible and 850 being excellent. A free estimation of your credit score can be obtained at https://www.creditkarma.com

Now for a misconception: Many people think that if they get the utilities in their name, having a cell phone contract or similar things helps build your credit. Unfortunately, those things do NOT help you establish credit. The only time that these items will make a difference (in building credit) is if your accounts go into collections; that will severely hurt your score and put a major blemish on your report.

I am not saying that having utilities in your name won’t be of any help to you, because it can. Businesses, property management groups, or banks will often ask for credit references. If you have been a trustworthy customer, you should have a strong list of credit references to offer.

Here are some easy ways to build credit while in college:

1) Getting a credit card and using it to make small regular purchases and paying it off entirely each month. Essentially treating it like a debit card. WARNING: If a credit card is used improperly or impulsively (exceeding your balance or missing payments) you will end up doing the opposite of what you set out to do.

2) Taking out a small loan at a bank. Loans of various sizes are available at banks and you could take out a loan, simply hold on to it, then repay it when it’s due (principle and interest).

Remember that a good credit history takes time to build and the sooner you get started the better.

Good luck!

Sam Honey
Peer Financial Counselor II
Powercat Financial Counseling
www.ksu.edu/pfc

There’s an App for That!

Between homework, quizzes, papers and exams, many students find that they don’t have much time left in their days to keep their finances organized. However, many apps are now available to help you keep track of your financial situation, without the hassle! Check out this list of apps that can help you out:

Mint.com (Free on Android, iPhone, and on the web) – Mint.com is a free, easy-to-use personal budgeting application. With Mint, users can monitor their online bank accounts and track their spending. Signing up at mint.com takes about 5 minutes and users can set up a budget, make goals, and track their progress. Mint is safe and secure and very user friendly. It has been named the Best Finance App by the 1st Annual App Awards.

Credit Karma (Free on iPhone) – Credit Karma provides free credit scores and free credit monitoring. With the Credit Karma app, you can check your credit score for free, from anywhere. There is no subscription or credit card required. Credit Karma will also alert you when something important changes in your credit report. This is a great way to protect yourself against identity theft. This app is currently only available for iPhones.

Pageonce (Free on Android and iPhone) –  Pageonce is a bill payment app that allows users to pay their bills from anywhere at any time. All of your account balances are readily available in one place for your convenience. Pageonce will also send reminders and alerts so you don’t miss a payment. Users can also track their frequent flyer miles, rewards, mobile minutes, and text and data usage.

Lemon Wallet (Free on Android, iPhone, and Windows Phone) – Lemon Wallet is an app that lets you store a digital copy of all the cards in your wallet on your phone.  This allows you to have a digital backup of everything in your wallet in case it is ever stolen, lost or misplaced. Lemon Wallet also provides a “Lost Wallet Service” that will provide you with an agent to help you with the process of cancelling your payment cards if your wallet is lost. All data entered into Lemon Wallet is encrypted and a PIN is required to access your cards. Also, you can remotely unlink the app from your Lemon account if you ever lose your phone.

 

Jamie Engelken
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc
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