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Taking Charge of Your Credit

If you haven't started already, you will probably start building your credit history while you are in college. 

Your credit history begins as soon as you take out a loan.  The loan can be in many forms including a credit card, a student loan, or a car loan.

Your timeliness in paying back your loan is reflected in your credit score - a grade that measures how reliable you are with paying back your debt.  Also, if you don't pay off the full balance each month, you will be charged an additional amount called interest.

Credit Score

Understanding the Credit Score

The credit score takes into account your repayment track record, the amount of debt you owe, your history with debt, how often you apply for credit, and the types of credit you use.  It helps lenders determine how risky it is to lend money to you, which can influence your interest rate and whether or not you qualify for certain types of loans.

When does your credit score matter?  Lenders may look at your credit score every time you do one of the following:

  • Buy a car or a home
  • Set up a phone or utilities
  • Rent an apartment
  • Apply for a job
Interest Rate

Understanding Your Interest Rate

The interest rate is your cost for borrowing. Paying your bill in full by the payment deadline results in a cost saving for you because you will not be charged any interest.  By deferring full payment you will begin to incur interest charges on your outstanding balance.


Controlling Your Costs

The amount you will pay in interest will be determined by two factors: your annual percentage rate (APR) and the amount of the outstanding balance.

These factors suggest:

  • You should be aware of your APR; this will help you know what percentage of your bill you will be paying in interest costs before you make your next purchase.
  • You should be award of how much you are spending; the more you owe, the more you pay in interest costs, and therefore, you should only spend what you know you can pay back, including interest.

Secure Your Future

Your credit rating is important to your future.

  • Use your credit sparingly, and keep your spending within your credit limit
  • If you encounter financial difficulty, talk to your lender and work out a payment plan.
  • Pay off your balance in a timely manner so that you avoid financial penalties
  • Only borrow what you need.




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