Financial Literacy

Credit is the trust that allows customers to obtain goods or services before their payments are due. A credit report is a statement including your credit activity and current credit situation (i.e your credit score and loan paying history). Your credit score (FICO Score) is measured by using five categories. The percentages reflect the importance of each category, and how positively or negatively it effects your credit report.”

• Payment History 35%– Are you making your credit card payments on time? The first thing any lender wants to know is whether you’ve paid past credit accounts on time. This is one of the most important factors in a FICO® Score.
• Amounts Owed 30%– Are you paying off your debt each month? How much debt you have relative to how much credit you have makes up  30% of your score. Keep your debt utilization ratio (amounts owed / total credit limit) below 30%.
• Length of Credit History 15% – How long have you had credit? In general, a longer credit history will increase your FICO® Scores. However, even people who haven’t been using credit long may have high FICO Scores, depending on how the rest of the credit report looks. Your FICO Scores take into account:

How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts?

How long specific credit accounts have been established?

How long has it been since you used certain accounts?

• Credit Mix in Use 10%– What is your credit made of? FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. A person who is making monthly payments on a credit card, an auto loan and a student loan is deemed to be less risky which is why this component makes up 10% of your score.
• New Credit 10%– How much new credit do you have? Research shows that opening several credit accounts in a short period of time represents a greater risk – especially for people who don’t have a long credit history. This isn’t a huge deal as new credit makes up just 10% of your score but this is helpful to remember the next time you are at a clothing store and they ask you if you want to save 10% by applying for their store credit card.

A budget is a financial plan that helps you keep track of your money, make informed spending decisions and plan for your financial goals. Below is a list of tips that will help you create a structured budget of your own.

• Create a budget using your best estimate of what you spend in a month. Take costs such as school supplies, food outside your meal plan, personal care items, rent, and laundry into account.
• Separate wants from needs. How much should you budget for non-meal plan food? How much will laundry cost? After a few months with tracking expenses, it becomes easier to distinguish wants from needs and put a plan into action.
• Track your expenses, there are many Apps available to assist you. You can also use a computer spreadsheet or a piece of paper.
• Once you have tracked your expenses and distinguished your needs from wants, total up all expenses and subtract from your income. If you are spending more than you are earning, you will need to make changes to your current plan.
• Use, don’t abuse, credit cards. In 2012, 70 percent of undergraduate students had at least one credit card, according to the International Journal of Business and Social Science.

College can be expensive, however, following the basics of financial planning will save you more in the long term. Adopting smart budgeting and spending habits now can prepare

Criminals access personal data such as names, Social Security numbers, and bank and credit card information. Using stolen data, criminals can obtain credit cards, set up cell phone accounts, and more.

If you suspect that your personal information has been stolen, act quickly. Contact the credit reporting agencies and have a freeze put on your account so nobody else can open new credit accounts in your name. You’ll find tips and credit agency contact details at the Federal Trade Commission’s website listed below. These federal websites offer information on reporting and repairing identity theft:

• U.S. Department of Education (ED) Office of Inspector General Hotline at www.ed.gov/misused (for cases in which ED funds are involved)
• Federal Trade Commission at www.ftc.gov/idtheft
• Social Security Administration at www.ssa.gov/pubs/10064.html
• Consumer Financial Protection Bureau at www.consumerfinance.gov/askcfpb/1243/what-identity -theft.html

For most people, a way to financial security is by saving and investing. If you make saving a habit, even a small amount, you are building the foundation for financial success.

Helpful Hints and Tips:

• Start saving, form a savings habit, and pay yourself first! That means each pay period before you are tempted to spend money, dedicate to putting some in a savings account.
• People who keep track of their savings tend to save more because it’s on their minds.
• Open and keep an account at a bank or credit union that meets your needs.
• Track your savings and investments, and monitor what you own.
• Plan for short-term and long-term goals.
• Build up emergency savings for unexpected events.
• Consult with a qualified professional on investments and other key financial matter.
• Many professionals call themselves “financial planners.” A good place to check the credentials of an investment advisor is your State’s consumer protection office, the State’s Attorney General’s office, or the issuing agency for any professional licenses or certifications.

MyMoney.gov is a product of the Congressionally chartered Federal Financial Literacy and Education Commission, which is made up of more than 20 Federal entities that are coordinating and collaborating to strengthen financial capability and increase access to financial services for all Americans.

Annual Credit Report – Get your credit report securely and for free.

Federal Trade Commission – Dispute procedures for errors on your credit report.

Responsible Student Credit Resource – Credit card companies make special credit card products designed for students. But before you get one it’s important to understand how credit cards impact your credit history.

Value of a College Education Calculator – Can help determine and estimate the value of your education.