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Money Management Basics, Part 4
 
Your Credit Standing Is as Important as Your Degree

No doubt you tracked your grades carefully throughout school. Now you have an even more important report card to pay attention to.

To get your credit report from any of the big three credit reporting bureaus—TransUnion, Equifax, or Experian—you can order your credit file by telephone, online, or using good old snail mail. I tend to like things faster, so I'm more apt to do things over the Internet and get information instantly. You're also entitled to get one free copy of your credit report from the credit bureaus by logging onto www.annualcreditreport.com.

Your credit report will show you what debts you have outstanding and whom you owe. Most importantly, your credit report details the status of all your accounts: listing them as paid or unpaid, charged off or current, and so forth. It will give you the addresses and often the phone numbers for your creditors should you need to contact them.

Your credit file will also indicate whether any negative information is contained about you in public records—things like court judgments, bankruptcies, and state and federal tax liens against you or your property.

To get your FICO score, you have to go to the company that originated it. FICO stands for Fair Isaac Corporation. It is the Minneapolis—based company that develops credit scores for tens of millions of people in this country. FICO scores range from 300 to 850. The higher your score, the better a credit risk you are. A high FICO score also shows that you've done an excellent job of managing credit and debt—something that, as I will explain shortly, can help you save or earn more than $1 million over your lifetime. Find out your FICO score by visiting www.myfico.com.

While there are multiple types of credit scores available, FICO scores are seen as the gold standard when it comes to credit scores. About 90 percent of all the top banks in this country use FICO scores to determine whether or not to extend you credit and at what interest rate; this includes mortgage companies, credit card issuers, auto lenders, and other financial entities. Having a great credit file—and particularly having a high FICO credit score, is often better than having cash in the bank. In fact, having a great FICO score can be just as important to you as that degree you spent so many years pursuing. Countless numbers of college grads ruin their credit while in school by accepting too many credit cards, maxing out their accounts, paying bills late, or, even worse, not paying at all...and then find that they can't even get jobs in their field because of poor credit. Don't make this mistake. You must jealously guard your credit at all times—and not just think about credit when you're in the process of applying for a loan of some sort.

Most college students don't know that their FICO credit score, and their entire credit standing, affects so many aspects of their lives—or will in the future after they graduate. When you are trying to get a job, did you know that an employer can legally pull your credit report and look at your FICO score and determine whether or not to extend a job offer to you? On your existing job, your current employer can also pull your credit report, look at your FICO score, and determine whether or not to give you a promotion. When you are in the market for auto insurance, did you know that your auto insurance rates are determined, in part, by your credit score? The same thing is true of life insurance. Your life insurance rates are set, in part, based on your credit standing and your credit score. Those with great credit will be offered better, more affordable life insurance rates compared with those with poor credit, who will be forced to pay higher insurance premiums.




 


Article Title : Money Management Basics, Part 4
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Related articles
• Money Management Basics, Part 1
• Money Management Basics, Part 2
• Money Management Basics, Part 3
• Money Management Basics, Part 5
• Money Management Basics, Part 6

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