A low credit score can affect your future eligibility for car loans, home loans, credit cards, or even employment. It’s important to understand your credit score and credit report. Credit scores are determined by your ability to make payments on time, the type of credit you use, the length of your credit history, and the amount of balances you owe. You can review this information by obtaining your credit report. Credit reports are available for free annually at the Annual Credit Report Web site. (You may have to pay additional fees if you want your credit score). Reviewing your credit report can help you catch discrepancies early and clear up problems before they get out of hand.
Credit Cards can be a good way to build and establish good credit if used properly. However, they are not “free money” and can have high interest rates and fees. To make sure you are establishing good credit, make your monthly payments on time. Only use the credit card for emergencies and try to pay off your credit card balance each month. If you are unable to pay the entire balance each month, try to pay more than the monthly minimum. Watch out for added fees charged for exceeding your credit limit or late payments.
Budgeting is a key component of money management. Tracking your monthly income and expenses will make you more aware of your financial situation. Using a budget wisely can help you identify where you can reduce monthly expense and identify excess income that you can deposit to your savings account. Other successful money management tools include balancing your checkbook regularly, not overspending what you have in your checking account, and keeping an accurate record of your ATM/Debit card transactions. For more information, attend one of the Money Management sessions listed offered by the University Center for Learning Assistance.
Use these resources to determine how much money you can afford to borrow. Only borrow what you need.
If you don't make payments on your loans, they will become delinquent and will eventually go into default. Default occurs when your loans become 270 days delinquent. The consequences of default include a damaged credit rating, loss of eligibility for further federal student aid, withholding of wages and tax refunds, and lawsuits or wage garnishment. Many creditors are willing to work with you during times when you cannot make your regular minimum payment. You should always notify your creditors right away if you cannot make a payment on time or have a change of address.
Don’t be afraid to ask for help if you feel your debt is out of control. There are agencies that can help you regain control.
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