Post Grad Life: Your Credit Score

From the moment you establish your first line of credit, America's three major credit bureaus - Equifax, Experian and TransUnion - are tracking you. This may begin with a student loan or a credit card. Regardless, it's important for students to start building their credit history before graduation. 

"Your credit report and credit scores can play a part in renting an apartment, getting a cell phone and buying a car," says Rod Griffin, Experian's director of public education. "Utility companies may charge you a lower security deposit if you have good credit scores. So having good credit can save you money." 


Credit Report Trumps Credit Score
Your credit report carries more weight than your credit scores. 

Student Loans Help Build Credit History but Mistakes Will Haunt You
Student loans are considered installment loans and paying these on time can help your credit score. Credit card debt and having multiple credit cards open can hurt your credit score. Also, if you've been late on payment or defaulted on a card, your scores will fall. A mistake can stay on your report for 10 years, especially if you misuse a credit card. For recent college graduates, those 10 years could affect mortgage rates, the ability to rent an apartment and the price of car insurance. 

Credit card debt is one of the most important factors in bureaus' determination of your credit score. The way you use credit cards offers insight into your borrowing and credit management decisions more than installment loans do. 

Recent grads (and anyone using credit cards) can help build their credit reports and credit scores by paying off their bills in full each month and by keeping utilization rates low. "Utilization" is the ratio of a cards balance to its credit limit (what you have borrowed divided by what you can borrow) and it is key to keep this balance below 30% of your credit limit. 

Your Credit Report Can Affect Your Job Opportunities 
Many employers run credit checks during the interview process. It's an important indicator of how you handle responsibility. In several fields, if you have a poor credit report, it will knock you out of the running for a position. Credit reports are used by employers to help verify a person's identity by comparing it to the information provided by the employee in their application. For jobs that require high security or higher risk responsibility, it is important that the identifying information in the application matches that in the credit report. 

Remember that a prospective employer cannot run a credit report without your written consent so be sure to read the fine print of anything you sign during the job application process. 

What now? 

We should all be checking our credit reports annually (we all get one from each national credit bureau for free, 3 free credit reports annually) to monitor fraud and to analyze our fiscal health. You can obtain reports from a secondary site like AnnualCreditReport.com. Most other ways of checking your credit score comes with a fee. CreditKarma.com is one of the few that offers free credit scores, however, it only receives credit reports from TransUnion. 



Any Credit & Housing Counseling questions can be emailed to rsimon@creditadvocates.org 
creditadvocates.org 


Congratulations 2014 Graduates!