Living on a budget and managing credit and money is something new for most
college students. That’s why many students need a credit guide. Think of it as a quick course in getting a financial life — and building a great future.
As you will soon discover, a credit card is an important financial tool. It’s a convenient way to avoid carrying cash. It will allow you to pay for large purchases over time, and it can also provide financial support in case of an emergency. Credit cards, and their responsible use, are also an important way for you to establish a positive credit history. By establishing good credit, you’ll be more likely to secure loans in the future for automobiles, homes and other types of credit.
Part of building a positive credit history is understanding what credit reports are and how they work.
WHAT IS A CREDIT REPORT?
A credit report is based on your credit history — that is, whether or not you have paid
your bills on time. This information, gathered from banks and other creditors, includes
monthly credit card and loan payment information. It may also include monthly rent or
utility payments.
WHAT IS A CREDIT BUREAU?
Credit bureaus collect and sell information about how people repay their debts.
They release this information in the form of a credit report to credit card
companies, auto financing companies, college loan officers and insurance
companies for use by these companies in reviewing loan and insurance
applications. Prospective employers and landlords also have access to this
information.
As you can see, it’s very important to maintain a solid credit history. A poor credit
history can make it difficult to get additional credit in the future. For your information, the two major credit bureaus are listed at the end of this article.
YOUR CREDIT RECORD SPEAKS FOR YOU
Credit bureaus don’t decide whether you will get credit. They just report how you
handled your debts in the past. The report will be used to judge whether or not you qualify
for a credit card, car loan, mortgage or any other type of credit.
WHAT’S IN MY CREDIT REPORT?
Your credit history usually contains four types of information:
· Identification: This includes your name, address and previous addresses. Also shown are your marital status, Social Security Number and birth date.
· Credit: Your record tells who gave you credit and when. It shows how much you paid, how often and if you paid on time.
· Public Record: This includes bankruptcy filings, tax liens and any court action that has been taken against you for unpaid bills.
· Inquiries: This is a list of parties who have recently inquired about your credit report. The list may include current and prospective lenders from whom you’ve recently sought credit, card issuers interested in soliciting your business, and employers.
WHAT’S NOT IN MY CREDIT REPORT?
By law, certain personal facts can’t appear in your credit report. They include your race,
religion, health status and politics.
THE INFORMATION STAYS WITH YOU
Bureaus can report information that is up to seven years old. They can share information about bankruptcy for ten years and they can report your lifetime credit history if it’s used to evaluate you for the following:
· A job paying at least $75,000
· Credit of $150,000 or more
· A life insurance policy with a face value of $150,000 or more
WHERE DO THEY GET CREDIT INFORMATION?
Credit bureaus get most of their information from the same sources that ask for it:
· Employers
· Banks and finance companies
· Landlords
· Credit card companies
· Major stores
· Court records
WHO CAN SEE MY CREDIT REPORT?
Only certain requesters can get a copy, and only under certain circumstances permitted by law:
· Creditors
· Insurance companies
· Government agencies (in some cases)
· Employers
· You
HOW CAN I GET MY CREDIT REPORT?
By law, you have the right to see your credit report. To request a copy, write to one of the three major credit bureaus. Information may vary, so you might want to contact all three. If you have been denied credit, the creditor must tell you which credit bureau it used to get your information. If you contact that credit bureau within 60 days, you can get a free copy of your report. Otherwise, the credit bureau may charge you a reasonable fee.
WHAT IF THERE'S A MISTAKE?
Mistakes do happen. There could be a data entry error or confusion about similar names. Information may even be out-of-date. Credit bureaus are in business to give accurate information and therefore want errors corrected as much as you do. If you find a mistake, notify the credit bureau right away.
The bureau is required by law to investigate your complaint and to correct or remove any information that isn’t accurate. The bureau must send a new report to anyone who has requested it in the past six months.
If you haven’t already done so, you may want to get a copy of your credit report from other bureaus just to be sure the same mistake doesn’t appear on their reports as well.
TELL YOUR CREDITORS IF YOU’RE HAVING TROUBLE
If you have problems that might affect your credit, call your creditors right away. They may be able to temporarily reduce or freeze payments for a while, or help you work out a new payment plan. The sooner you call, the more they can help keep your record clean.
WHAT IF I HAVE AN EXPLANATION?
Job loss, illness or divorce can threaten anyone’s good credit record. And sometimes spending just gets out of hand.
When times are tough, it may be tempting to ignore your bills. But don’t. Late payments and unpaid debts will be part of your credit record even after you get back on your feet.
If there are credit problems in your past, you should be the first to mention them. Attach a brief explanation to your credit application and describe the steps you have taken to correct the problems. It’s best to be up-front from the start.
FOR HELP AND MORE INFORMATION
For information about your credit report, contact the three credit bureaus:
· Equifax
Information Service Center
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
http://www.equifax.com
· Experian
National ConsumerAssistance Center
P.O. Box 949
Allen, TX 75013-0949
1-800-682-7654
http://www.experian.com
275 Eastland Rd.