Credit Scores

Oxford Federal Credit Union (OFCU) has begun its annual visits to high schools in Oxford County, bringing its Financial Fitness Fair, called CU@22 (a play on Credit Union and 22, which is how old students are pretending to be) to the schools.

At CU@22, students have graduated from college, are given a career, a salary, and a credit score and are tasked with visiting different booths to purchase a car, insurance, housing, furniture, food, personal items, etc. that fit into their budget, based on their salary.

Prior to CU@22, staff from OFCU visit the classroom to teach students about the importance of a good credit score. As they go through the CU@22 event, they are able to see the benefit of a good credit score when they are purchasing items at each booth.

Credit Scores play an important role in your financial life and it’s important to establish credit, and use it wisely. When OFCU is in the classroom, the question we get asked most is, “How can I establish credit when I am just starting out?”

One way students can begin building a positive credit history is if they can be included as an authorized user on a credit card account. This presumes that the credit card holder has a good credit history. It’s also important to have students review the monthly credit card statement and perhaps help make payments.

Learning about the entire credit process, from making a charge to paying the bill, can help students when they are out on their own. They need to understand that paying bills on time is the key to using credit to work for you.

Another alternative is for students to get a secured credit card. In general, with a secured credit card you put money on deposit and that deposit serves as collateral against your credit card purchases. You'll need to check with the credit card provider here, too, to make sure that your payment history will be reported on your credit report.

The key to building a good credit history is toshow financial good faith. Do you pay your bills on time? Do you use credit responsibly? Do you stay under your credit limit? To help manage your credit, use financial tools such as online banking and online bill paying to keep track of your accounts.

If you owe $25 per month on an account for the next ten months, use the automatic bill paying program to set up recurring $25 payments to the lender until the loan is paid off. By pre-arranging the bill payments, you can be sure that you won't be past due or miss a payment.

By taking these simple actions, and managing them responsibly, it will help tremendously to build a credit history and a good credit score.

This information is provided by Oxford Federal Credit Union as general information, and is not intended as financial advice. If you have a financial question you would like answered email it to marketer@ofcu.org.

Photo:

Susan Graves