Credit Report Basics for College Students

College students, did you know that as many as 30 to 40 percent of employers run background checks on prospective employees?

Many of these pre-employment background checks include credit reports. Employers may use a credit report to select against a job applicant with a poor credit report in favor of an equally qualified applicant with a good credit history.

Your credit report may also affect your eligibility for loans and the interest rate you pay when you borrow money to purchase a new car or a house after graduation.

Bottom line, take the right courses for your major, learn the material, get the best grades you can, prepare your resume, and go after the career you want, but don’t ignore your credit during college.

A good credit report with a high credit score can help you in lots of situations after graduation whether it is for an apartment rental, a new car loan, a house, or even a job.

Here are some hints to help your credit report and credit score:

Pay your bills on time. Late payments (30 or more days late) that are reported to the credit bureaus may stay on your credit report up to seven years. Late payments lower your credit score. Paying your bills on time establishes a payment history necessary to get a good credit score.

Use credit wisely. While it may be a good idea to establish credit accounts during college, it is certainly not a good idea to get so far into debt that you cannot keep up with the payment terms. Additionally, keeping low balances on your credit accounts can be a positive factor for your credit score.

Establish credit as early as you can responsibly handle it. Your credit score normally requires at least two credit accounts with history to calculate a credit score, so having credit may be necessary to get more credit. Your credit score also factors in the length of your credit history, so the longer you have credit, the better your score may be.

If you ever do have an account in collection (e.g. wrote an NSF check for pizza, didn't’t pay some parking tickets, didn’t pay for a medical procedure not covered by insurance, had a landlord get a judgement against you for apartment damage or unpaid rent, etc.), pay the balance off. Some lenders will not even consider lending to applicants with unpaid collections. Plus paying collections off will help your score.

If there is inaccurate derogatory credit information in your credit report, dispute it. Under the Fair Credit Reporting Act, it is your right to dispute inaccurate information in your file. Getting inaccurate credit information corrected or deleted will help your credit score. Unfortunately there’s not much you can do legally about accurate derogatory information.

If you do have “derogatory” credit information in your credit file, don’t despair. It falls of after 7 years. Plus older “bad credit” has a smaller negative affect on your credit score that new “bad credit.”

f you are eligible, get a free copy of your credit report at www.annualcreditreport.com. For more information on credit reports, check out the articles and credit report offers at www.creditreporting.com