By Toma Lynn Smith
Kiplinger’s Personal Finance Winter 2006 issue featured an article of Frequently Asked Questions (FAQs) regarding credit. One reader asked, “Can an overdue library book affect my credit score?” The magazine response was yes, because local governments are hiring collection agencies to get money owed to them to increase revenue. This may be extreme, but any company can place your financial activity with them on a credit report, stated Kiplinger’s Web site.
Amanda Powers, a sophomore majoring in education said she thinks she knows what a credit report is but doubts that she has one, because she has no credit.
A credit report shows how an individual’s bills have been handled. If a business, such as a car dealership sees frequent requests from other creditors, it may come across as desperation according to radio talk show host and author Dave Ramsey.
Factors that can influence your credit score include payment history, outstanding debt and length of credit history. Credit score can vary with each reporting agencies such as Experian, but like a GPA, the higher the better.
Director Steven R. Katz, of Consumer Communications with TransUnion, a credit reporting company said there are three things college students can do to have a favorable credit score. First, pay on credit cards on time, even if it’s the minimum payment, second, have 50% or more of the limit available on your credit cards and third be cautious when using a credit card, if you cannot pay, “contact them directly.”Companies rather hear from you than being ignored.
Actions or lack there of, will be reported.This vital document shows creditors such as a car dealership, “the likelihood that the person will make payments on time in the next two to three years” as stated on http://AnnualCreditReport.com, which offers consumers a free credit report online annually.
“It is the foundation for everything,” said Mortgage Broker Blanca Cabanas of Countryside Mortgage. “It is the determining factor of a loan and the kind you’re going to get.” CNBC financial guru Suze Orman, said with not-so-good credit, a creditor will offer a lower amount to finance but with a very high interest rate.
Simon Sangpukdee, a post-baccalaureate English student said, “It [credit report] is the sum of credit history and it’s important for financing.” Being married and in his early 30’s, Sangpukdee may be more aware of the value of a credit score.
Student loans, car payments, and mortgages are the major three, when it comes to borrowing and owing money for life’s major expenses. It can also effect getting an apartment and the amount of deposit according to local property management company Peterson Popham.
Employment can be effected as well as some companies are allowed to get your credit history, stated Courier Journal’s classified section.
Credit reports are a report card, being responsible with timely payments and only getting the amount you can pay back will give you A’s and B’s.
Toma Lynn Smith is a junior majoring in English. E-mail her at features@louisvillecardinal.com.
