Finance for College Students: Credit

Credit information is an essential part of our modern day life. It is commonly used whenever a consumer applies for insurance, housing rentals, a loan, a job, etc. It’s important to check your credit report from the three major credit bureaus: Experian, Equifax, and TransUnion or by going to www.annualcreditreport.com (a free option). It is up to you to make sure the information on your report is correct and, if not, amend the errors.

What does your credit report contain?

• Personal data such as your name, social security number, date of birth, address and marital status.
• Your current and past credit history, credit terms and limits as well as how well past debts have been repaid in the past.
• Inquiries, which are a list of requests for credit reports on the individual concerned.
• Public records such as bankruptcies or lawsuits.
• Your personal statement, which is a limited statement where you can explain your position in any dispute with a lender.

If there is incomplete or incorrect information, you should contact the credit bureau in writing and fully explain the information believed to be incorrect. The bureau will then contact the lender or other information provider. When the investigation is complete, the credit bureau must provide you with a written report of the results.

If negative information in your report is correct, generally only the passage of time will remove it from the report.

What types of things will remain on your credit report?

• Criminal convictions may be reported without any time limit.
  
• Bankruptcies under chapters 7, 11 or 12 can be reported for up to 10 years. Under chapter 13, they remain on your record for seven years.
  
• Information reported in conjunction with an application for credit or life insurance in excess of $150,000 may be reported with no time limit.
  
• Lawsuits or unpaid judgments can remain on your report for more than seven years or until the statute of limitations expires.
  
• Unpaid tax liens for federal, state and local taxes can remain on your record for 15 years, while paid liens remain seven years.

When it comes to credit, every college student should understand these basics. It’s important to establish good credit at a young age, but you must be self-disciplined. Never be afraid to ask questions or speak with an advisor. It pays off to be knowledgeable.