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I got my first credit card during my freshman year of college. I wanted more money, and to my understanding a credit card would take care of my financial needs.
I maxed it out and started to fall behind on payments. As a student in the midst of school, friends, relationships and everyday life, who has time to think about credit scores? That was the last thing on my mind.
In fact, it’s a complicated subject we all tend to push aside. All in all, we are too often forced to learn the hard way about the effects of credit scores. By the time we get the gist, it ends up being too late.
Why is there a class about everything else except for credit scores? There’s even a pop cultural course at Copenhagen University, where students are given a chance to learn more about the era of Beyoncé.
We’re taught a plethora of formulas, proper grammar, science and history. However, we have no set knowledge of how to keep our credit scores in good standing.
Ninety percent of lenders use FICO scores because they’ve been around since 1989. A FICO score determines many things, including whether or not you qualify for a credit card or a low mortgage rate. What we don’t know is, your score has to be at a 700 or higher to be considered “good credit.” So, from 300 to 699, you are basically in the dumps.
Poor credit is from 300 to 649. At 650, you’re considered a fair ranking. Nevertheless, being in fair standing does not give you room to borrow for necessities like cars, houses or furniture without high interest rates. An interest rate is the amount charged as a percentile, from the lender to the borrower for the use of assets. In this case, your interest rate controls your total amount of debt.
“Well, just don’t get a credit card until you’re ready,” is what most people say. The issue here? No credit equals bad credit. This sounds like a scam to me. I have no other option but to be in debt, and on top of that, I have to be “responsibly” in debt. OK, great. Next stop, bad credit.
After we receive our degrees at graduation, we are headed to the real world. The world in which we have needs beyond tex books and homecoming concert tickets. A world in which we have to borrow money.
When is the university going to make CRE 2100 (credit score basics) a required course in college? We need answers just like the government needs our money.