Understanding Credit
The Financial Aid Office encourages all students to monitor their credit because it affects so many aspects of your life. As part of the Fair Credit Reporting Act you can access a free credit report from each of the nationwide credit bureau and nationwide specialty consumer reporting agencies online at Annual Credit Report, any other site will charge you for the credit report. You are also entitled to a free credit report if:
  • a person has taken adverse action against you because of information in your credit file
  • you are the victim of identity theft and place a fraud alert on your file
  • your file contains inaccurate information as result of fraud
  • you are on public assistance
  • you are unemployed but expect to be employed within 60 days
You have the right to request your credit score, but you will have to pay for it. You have the right to dispute incomplete or inaccurate information and consumer reporting agencies must correct or delete it. However, they may continue reporting verified and correct information. Consumer reporting agencies may not report outdated information and access to your file is limited. You must give your consent for employers to have access to your credit report. You can opt out of unsolicited prescreened offers of credit and insurance you get based on information in your credit report by calling 1-888-567-8688. You may seek damages from violators and identity theft and active military personnel have additional rights.

It is important to review your credit report even if you haven't experienced credit problems in the past or feel that you don't have enough history to warrant a credit report. There may be errors or ways to improve your credit report that you are unaware of.

The GradPLUS loan program is available to students without adverse credit history. Adverse credit history can include:
  • delinquencies of 90 days or more on a debt
  • having been subject to a default determination
  • bankruptcy discharge
  • foreclosure
  • repossession
  • tax lien
  • wage garnishment
  • write-off of a Federal Student Aid debt
A lack of credit history is not considered adverse credit.

Terms to be familiar with when reviewing your credit report.

Collections - failure to make payment on a delinquent or defaulted account may result in the creditor or lender contacting an agency or moving your account into their department that specializes in collecting payment from delinquent accounts. It will affect your credit score negatively.

Credit Inquires - requests for your credit report and credit score. A hard inquiry is a request by a creditor/lender to pull your credit report and credit score that has been authorized by you, the potential borrower. These inquires take place when a borrower wants a new credit card or is interested in a car loan. Hard inquires do affect your credit score. A soft inquiry is request from prospective employers, inquiries made by current creditors, and companies wanting to offer a new credit card to view your credit report. Soft inquires do not affect your credit score.

Credit Report - a summary of the information contained an individual's credit history. Creditors use this information to evaluate the likelihood that the individual will repay future loans. A credit report is created from payment information and credit account information that creditors/lenders report to the three authorized credit reporting agencies. A person begins to build credit by having a credit card, consumer loan, student loan, or some form of personal credit.

Credit Score - a quick, accurate, consistent and objective method that uses statistical models to determine a borrower's future credit risk. The higher the credit score the more likely a borrower is to repay a future loan. Credit scores can range from 325 to 900, but each lender/creditor determines its cutoff points and underwriting criteria for potentional borrowers. This is not included with your annual free credit report, but can be purchased from each of the three national credit reporting agencies. Your credit score can vary from agency to agency.

Default - non-payment of a loan or credit card balance. The lender, guarantee agency, or creditor may require full payment of the debt in addition to associated fees and fines. Federal Stafford Loans are put in default status after 270 days of non-payment. This status will affect your credit score negatively.

Delinquency - failure to make payment on a due/past due account typically characterized in thirty day increments of lateness. For example 30 days delinquency, 60 days delinquency, etc. This status will affect your credit score negatively.

Installment Accounts - an account where an amount is borrowed at once and paid back to the lender/creditor in set amounts over a set period of time with either a fixed or variable interest rate. Examples include: mortgages, education and car loans

Revolving Accounts - accounts that allow you to add and carry forward debt until you reach a pre-determined maximum amount. Interest accrues on the balance at some point in time during the billing cycle. Examples include: credit cards, retail charge accounts, finance accounts and personal lines of credit. There may be fees associated with use of the card.

This information is only a small portion of what is available to consumers to understand their credit. Please visit the Federal Trade Commission's website on credit for more in-depth information.

Other websites that can provide useful information on credit and its impact include: YouCanDealWithIt.com and AccessGroup.org Student Resources.

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