By Jim Birmingham/reporter
As college students, it is important to understand one’s credit and maintain a good credit score, a financial consultant told students April 19.
In Blaze Your Way to Good Credit, Demeta Rose, vice president of finance for Citigroup, said debt from student loans and other necessary payments college students have to pay is a known evil. Students leave college with mountains of debt while trying to get into the work force to pay off their debt.
Not paying off debts and spending above one’s means has a negative effect on a student’s credit score, Rose said.
“Your credit score is a compilation of what you’ve done over your life,” she said. “It is rated from zero to 400, which is poor; 400 to 600, which is fair; and 700 or above, which is excellent.”
Rose suggested that students get an annual credit history, which can be obtained for free, to see what their credit history is. The report reflects the credit score from Equifax, Experian and TransUnion, which are credit bureaus. It allows people to see how all three credit bureaus are rating them, which is more advantageous than seeing just one rating.
Factors like bill pay history — if the minimum amount is paid or not or if bills are being paid by the due date — and the type of accounts one has will affect a credit score, Rose said.
“If your due date is not conducive to when your pay date is,” she said, “call your lender and tell them when your due date is.”
The company should work alongside consumers so it is easier to make payments by the due dates.
Rose also warned students of companies that send voluminous amounts of credit cards.
“You get all these cards coming from places you’ve never heard of because they’re coming after potential college students because they have the potential of getting a degree and making more money,” she said. “But college students get the credit cards and aren’t savvy enough or educated enough to know how to use them.”
Responsible buying should be at the forefront of one’s spending when using a credit card, or one’s credit score may begin to plummet, Rose said.
“A lot of people, once they get into a jam, they don’t call their creditors,” she said about people who have gotten into a crunch and can’t make their payments. “It’s a process, but it can be fixed.”
Rose said people should call their creditors and tell them what the problem is, “but be honest about it,” she said.
“Be aware that if they’re working with you and you take a little payment plan, it is still going to hit your credit,” she said. “And when you’re beginning to get back on track, pay your bills on time. Pay the minimum amount at least and don’t charge more than you can pay off each month.”
People should not co-sign anything, should limit credit requests and should contact their creditors, Rose said.
“In three to six months, your credit worthiness will go up,” she said. “Govern yourself so you keep that up.”
But creditors aren’t impervious from making mistakes either, Rose said.
“When you get your credit report, go through and look at it because they make mistakes,” she said.
If people find mistakes in their report, they need to file a letter of dispute, describing the mistake.
Rose also warned students about credit scams.
“Credit repair services will not contact you,” she said. “They want you to contact them. If somebody sends you an e-mail saying, ‘Oh, we can fix your credit for this amount of money,’ that’s a scam.”
If the e-mail claims to be from a legitimate financial institution, Rose said the recipient should call the local branch and investigate but not reply to the e-mail.
“Get in the habit of paying your bills immediately,” she said. “Your employers can see your credit and others can too. Take responsibility and be accountable for yourself.”
