College expenses accumulate quickly, so there is a good chance you will require some help paying for your education. Maybe mom and dad are chipping in, but tuition, books, housing, and other related expenses might tax their generosity.
Independent loans are available for your education, but to qualify, you’ll need to demonstrate a solid credit history. Your credit worthiness is gauged by your overall “credit score.” Simply put, a number is assigned to you based on the results of every credit interaction you have ever had.
If your credit behavior has been responsible, and reflects a long history of paying your bills on time, the number will be high.For every negative credit entry, like a late payment or loan default, your score goes down.Credit performance is also judged using criteria like diversity and duration, which can be problematic for young people.
Credit Score: What It Is, Why It Matters
Three primary credit agencies are in the business of compiling your credit report and providing it to lenders who request it. Some lenders also employ their own proprietary metrics to “grade” your credit history. Whatever method is used to derive it, your credit score becomes the basis for the lenders decision to offer or withhold your loan.
The Fair Credit Reporting Act (FCRA) defines specific rights related to your credit report. Three important points contained in the law ensure that credit applications are handled uniformly, and without potential for bias:
- A lender must tell you if information contained in your credit report has been used against you.
- You have an intrinsic right to know what information is contained in your credit report.
- You have the right to dispute any information contained in your credit report that you feel is inaccurate or incomplete.
A 2003 revision to the FCRA establishes your legal right to receive free copies of your credit report from each of the three national credit bureaus, once each year. Fair and Accurate Credit Transaction Act (FACTA) requests are submitted annually to www.annualcreditreport.com.
Age Begets Good Credit?
FCRA and FACTA protect you from institutional bias, by standardizing the ways in which your credit information is used. But the real problem for you might be your age.As a college aged person, you are likely free of home mortgages and other long-term credit obligations. If you have a car loan, it is probably your first one.
