Teach Students How to Develop and Maintain Good Credit

Financial-aid administrators helping their students develop good money-management skills can share facts about credit reports to show the importance of establishing good credit ratings. The USA Funds Life Skills^® financial-literacy curriculum offers the following information that financial-aid administrators can provide students regarding developing and maintaining good credit:
 
How Do You Establish Good Credit?

• Pay off your revolving credit balances (bank and store credit cards) in full.
• If you can’t pay your balance in full, make at least the minimum payment.
• Pay your bills on time.
• Undercharge. Don’t charge as much as your limit allows.

Lower credit ratings indicate that you are a poor credit risk. Lower ratings ensure that you won’t get credit when you need it to buy a house or a car, or that you will pay a much-higher interest rate.

How Do You Lose Good Credit?

• Making late payments.
• Exceeding the credit limit on your credit card.
• Writing bad checks.
• Defaulting on a loan.
• Filing for bankruptcy.

What Happens When You Have a Bad Credit Report?

• You may not be able to rent an apartment.
• You may not be able to buy a house.
• You may not be able to purchase, lease or rent a car.
• You may not be able to obtain other forms of credit.
• If you are able to get credit, you will end up paying very high interest rates.
• You can be turned down for a job.
• It’s like getting a bad grade — it stays on your permanent record.

How Do I Access My Credit Report?

You can obtain a free copy of your credit report each year from each of the three major credit-reporting agencies by visiting www.annualcreditreport.com. These online addresses offer access to some of the largest credit bureaus: www.equifax.com, www.transunion.com and www.experian.com.

Module 1 of USA Funds Life Skills, “Get a Grip on Your Finances — Smart Spending for Students,” provides additional information about establishing and maintaining credit, as well as details about determining goals, creating a budget, and using credit cards wisely.

USA Funds Life Skills is a flexible educational program that equips postsecondary institutions to teach their students to manage their time and money wisely on campus and after graduation.

For more on teaching students about establishing and maintaining good credit, and to learn more about USA Funds Life Skills, contact your USA Funds^® debt-management consultant.