Fiscal Fitness – Lesson

Fiscal Fitness
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Did you know? Nationwide, college students are using credit cards more and more as a financial crutch. You want to maintain a good credit history because you will pay lower interest rates on loans, reduced insurance premiums, and it can even help you get a better job. Companies look at your credit history every time you apply for a loan, finance a car, rent an apartment, buy a cell phone, apply for a credit card, or take out a mortgage to buy a house. Employers often look at a potential employee’s credit history to help them measure his/her level of responsibility, reliability, and integrity.

After watching the video, how did Nick run up his credit card debt?

Credit Costs: Most of us have no idea of how much credit is costing us. So to begin, take a crash course on how credit cards work. After you review the information, take the six-point quiz and record your score on your activity guide. Then investigate the case files to figure out just what happened to Emma, Byron, Kevin, and Maria when they bought their digital musical players.

Why did Emma, Byron, Kevin, and Maria pay such different amounts for the same digital music player?

Review Your History: Your credit report is a report that details your current credit and how you’ve managed your credit over time. Because close to 20 percent of all credit reports contain errors that can have dramatic financial consequences, you need to check your credit report annually. You can order a free credit report each year from the this government site, annualcreditreport.com. After you get your report, carefully review it and dispute any errors in writing. The free booklet, Understanding My FICO® Score contains sample letters for you to follow. Federal law mandates when credit is disputed, companies must resolve the dispute in a timely manner — within 30 days.

When do you plan to order and review your credit history?

Know the Score: Establishing a good credit history will earn you a good FICO Score. Going forward, your credit score might be much more important than you think it is. While credit reports are compiled by three companies: TransUnion, Equifax and Experian. The information in these reports is presented differently, and these organizations also calculate their own credit scores (Equifax has ScorePower, Experian has a PLUS score and TransUnion has its VantageScore). However, it’s your FICO score, compiled by the Fair Isaac Company that is the all-important number. This score is derived from the information provided in the above mentioned reports and ranges from 300 to 850. You usually have to pay a fee to get your FICO score.

What are three benefits of knowing your FICO score?

Live within Your Means: It is challenging to use self-discipline and not be too ready to whip out your credit card to buy the things you want if you cannot afford them. However, when you begin to pay attention to your finances, make an effort to get out of debt, and begin saving for the future, you will feel more in control and a lot less stressed. For a fun way to save each day to consider the Latte Factor.

Use the latte calculator and figure out what a daily savings could mean to your future.