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In this section, you'll learn how to build a healthy credit profile, how to keep your debts manageable, where you can go for help if your debts become too high, and what to do if you're denied credit.
How to Build a Healthy Credit Profile
How you handle your credit cards and other loans affects your creditworthiness. Remember to use your credit responsibly and be sensitive to the terms of the payment agreements you made when you established your accounts. Whether you choose to pay the total outstanding balance on your bills each month or just the minimum payment due, your payment must reach the financial institution or business by the payment due date. Your payment due date is typically within two or three days of the same time every month. If that time of the month is not convenient because it doesn't coincide with your paychecks, contact the creditor to see if your billing cycle can be changed. Or, adjust your budget accordingly.
Notify Creditors of a Change in Address
Whether you're moving across town or down the hall, make sure your creditors always have your most recent address so that you'll receive your billing statements promptly. Some creditors allow you to notify them of your change of address online. This also includes temporary address changes (like those during breaks or between semesters).
Manage Your Debts - Reduce Them Too!
"Where did all my money go?" The easiest way to find the answer is to take the time to establish a monthly budget. Differentiate between the things you "need" and the things you "want." Start with your fixed expenses or "needs" - like rent, food, utility bills, phone bills, car loans, and insurance payments. Then figure in variable "wants" like clothing, eating out, and entertainment. Subtract your expenses from your income and you have your starting point. If the sum is below zero, it's time to reduce your expenses by cutting out any unnecessary spending on "wants." You'll be amazed how much money you'll save by investigating all opportunities for discounts.
Here Are Some Tips for Spending Less
How do you establish your credit history? Even if you've never made a major purchase, there are ways to start building a good credit history:
• Ask your Student Affairs Office for a list of merchants who give student discounts.
• Before you make a purchase, ask the merchant if a student discount is available.
• Take advantage of any promotional coupon books you receive. These books are distributed by vendors on campus each semester.
• Check out the www.studentadvantage.com Web site. Their discount program for students features national name brands as well as local merchant offers.
• Check out www.coolsavings.com or www.aroundcampus.com and see if they have coupons for merchants near your school.
• Review Web sites like www.buy.com before making any major purchases. They may have the item you're purchasing at a lower price.
• Think before you purchase. How many hours of work at your summer job will it take to pay for what you're buying? Don't spend more than you can pay off in a reasonable amount of time.
• Look for supermarkets that offer "clipless coupon" store cards. When presented to the store cashier, these cards enable you to take advantage of special pricing and bonus buys on advertised items.
• Instead of running to the local convenience store to satisfy your late-night cravings, consider a 24-hour grocery store. Items in grocery stores are generally far less expensive than items in convenience stores.
• Perhaps you can qualify for scholarships. Check out www.fastweb.com for a comprehensive listing of what's available.
If Your Credit Application Is Denied
If you've been denied credit because of information supplied by a credit bureau, federal law requires the creditor to give you the name of the bureau that supplied the information. If you contact that credit bureau within 60 days of receiving the denial, you are entitled to a free copy of your credit report.
If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge. However, if negative information on your credit file is accurate, then only time and responsible credit habits can help restore a bad credit history.
If the creditor informs you that your credit application was declined because of an "insufficient credit file," and you are a full-time student, you may want to contact the creditor and make sure that the company knows you are a full-time student. They might agree to give you a lower initial credit line to start your credit file. As you advance through college and perhaps go on to graduate school, you can request to have your line increased.
It's important to note that under the Equal Credit Opportunity Act, financial institutions must make credit equally available to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age, and without regard to whether all or part of the applicant's income derives from public assistance, or if the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
Copyright 2005 Credit-Land.com, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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