Tips for Students: Credit Reports and Building a Strong Credit History
A credit report is similar to high school and college grade transcripts. Just like poor grades can negatively affect your career and academic options, a poor credit history can have far-reaching negative consequences.
Tips for Building a Sound Credit History
- Keep your own checking account and savings account. Do not overdraw your account.
- Establish a credit card in your own name, and use it responsibly.
- Pay bills before the due date.
- Limit the number of credit cards you own. Too much open credit, even if the accounts have zero balances, will negatively affect your credit score.
- Close unused accounts do not just cut the cards up or the account will still show as an open line of credit on your credit report. Ask the issuer to state on your credit report, "account closed by consumer."
- Limit the number of credit inquiries. Every time you apply for credit, it shows as an inquiry to your credit report. Too many inquiries are viewed negatively by lenders.
- A large number of recently established credit accounts may hurt your ability to be granted credit.
- Periodically obtain a copy of your credit report to verify that information reported is accurate and to look for ways that you can improve your credit.
How to Order a Credit Report
You may order your credit reports from the three major credit reporting agencies. In order to see your entire credit history, you should review the records from each of the agencies. You will generally be charged a fee for each credit report. This fee varies by state, but it is generally $8.00. You are also entitled to a free copy of your credit report within 60 days after being turned down for credit, employment, or insurance because of information supplied by a credit reporting agency. When you get your credit report:
- Check that all your personal and credit information is correct.
- Report any errors in writing to the appropriate credit reporting agencies and follow up with them to be certain corrections are made.
- If you have unresolved disputes with the credit reporting agency, you may submit a written statement that will be included with your credit report.
Source: Federal Deposit Insurance Corporation at www.FDIC.gov
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