Managing Your Credit

Managing Your CreditEstablishing andmaintaining good

creditcan provide manybenefits to yourfinancial future.

To Do List• Set up a realistic budget and stick to it. A

budget template is available at www.navigatingyourfinancialfuture.org.

• Open up a checking account and a savings account if you have not done so already. College Students should check with their

schools to see which local banks offer sign-up incentives for students.

• Evaluate your current credit situation.

Establishing Good Credit• Know what type of accounts show on your

credit report. • Review your credit report annually.• Verify that the information on your credit

report is accurate.• Pay the minimum balance (or more) ON

TIME each month.• Avoid going over your credit limit.• Cancel credit cards you are not using or do

not anticipate using.

• Charge only what you can afford to repay.• Try to make a payment larger than the minimum

amount due in order to reduce the balance and pay off the card at a faster rate.

• Protect yourself from credit card fraud. Sign your card right away. Keep your card in a safe place. Shred credit card receipts once your monthly statement has been verified against the receipts.

• Keep your address current with the credit card company so your bill gets delivered promptly.

• Sign up for E-Statements, if available.

Your Credit Reputation• Character - summarizes a lender’s sense of how

responsibly you handle credit obligations. • Capacity - is defined as the financial ability to

assume a certain amount of debt. • Capital - consists of the financial assets at your

disposal to pay off debt if your character and capacity do not prove sufficient. This might be your car, home, stocks, bonds, mutual funds, etc.

Credit Reports and Credit Reporting

Agencies• Visit www.annualcreditreport.com to obtain a free

credit report.• You may also contact the three major national

credit reporting agencies directly: www.equifax.com or 1-800-685-1111www.experian.com or 1-888-397-3742www.transunion.com or 1-800-888-4213

• Consumers are encouraged to review all three reports, as information may vary from one report to another.

Your Credit Score

• Lenders track your credit score and use it to determine if they should: offer new credit, increase or decrease your interest rate, and/or increase or decrease your credit limit.

• A good credit score is a vital part of your financial health.

• While a credit report is free, there is a small fee involved for requesting a credit score. For details visit www.annualcreditreport.com or www.myfico.com.

Credit Scoring TableCredit Score Description

730 -850 Excellent

700 – 729 Great

670 – 699 Good

585 – 699 Average

300 – 584 Bad

The credit rating scale maximum and minimum stretches from 850-300. While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score.

Credit Scoring TableDetermining

FactorWeight

PercentageDescription

Payment History

35% How particular you are in paying your credit card bills, loan installments and dealing with any form of debt affects your credit score.

Debt/Amount Owed

30% Next most important factor that affects your credit score is the amount of money you owe on each of your financial accounts.

Credit History Length

15% The length of time over which you have used credit lines and your banking accounts also influence the score.

New Credit Lines Used

10% The number of new credit lines used or banking accounts recently opened impacts your score.

Credit Types Used

10% The range of different credit types used will also influence the credit rating.

Credit Report Verification

• Personal • Credit Account • Public Records• Negative Information• Inquiries

Correcting Errors on Your

Credit Report • You have the right to file a “Consumer Dispute” with the applicable credit reporting agency. Credit reporting agencies are obligated to verify the accuracy of their reports when notified of such disputes.

• If you pulled your credit report through an online site, Consumer Disputes can be filed electronically.

• For more information on how to dispute credit report errors, please visit: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.

Protecting your Identity• Leave important documents at home!• Keep documents in a safe place.• Use a post office box if necessary to receive

important information.• Protect your Social Security Number.• Protect PINs and computer passwords.

Protecting your Identity

• Pick up new checks at the bank – not from your mailbox.

• Check your credit report annually.• Protect your driver’s license.• Report suspected fraudulent activity or stolen

cards to appropriate office.

If your Identity is Stolen, immediately

contact:Creditors & Financial Institutions

Law Enforcement

Federal Trade Commission

DMV (for driver’s license)

SSA (for Social Security Card)

If your Identity is Stolen

• Record Keeping – It is important to maintain written chronological record of dates, times, and names of telephone contacts. After a telephone contact has been made, it is crucial to follow up in writing and keep records of all written correspondence.

Tips to Remember• Maintain good credit to help you in future financial

transactions.• Know the difference between good and bad credit

in terms of credit scores and credit reporting data.• Acknowledge there are negative consequences to

defaulting on any credit account and how this will impact your overall credit rating.

• Protect all of your confidential and private information. Credit is like an individual’s reputation - it is a precious commodity!

Navigating Your Financial FutureOSFA offers a variety of toolsand resources to assist you inyour pursuit of higher education.

www.NavigatingYourFuture.org

Questions?• Contact the Florida Department of Education,

Office of Student Financial Assistance1-888-827-2004 (Grants/Scholarships)1-800-366-3475 (Loans)www.FloridaStudentFinancialAid.org