Columbia University Student Financial Services

Credit

Individuals establish their credit history by borrowing money or charging purchases. Typically, anyone who has ever used a credit card issued in his or her own name has established a personal credit history. Financial institutions and major retail stores report their customers’ credit information to national credit bureaus that, in turn, compile the information in the form of a credit report.Whenever you apply for a loan, your credit report will most likely be reviewed.

Credit Report

A credit report is a record of every credit card, retail account, student and personal loan, and other credit accounts made or established in your name. Whenever you apply for a loan, your credit report will most likely be reviewed. In reviewing your credit report, the lender is trying to determine your ability and willingness to pay based on your payment history.

Good Credit

Good credit requires a continuous pattern of prompt payments, no current payment delin­quencies, and no negative items such as collections, repossessions or foreclo­sures. A good credit history means that you are "creditworthy.” A good credit record and score indicates that you are likely to repay the loan for which you are currently applying.

Bad Credit

Bad credit, on the other hand, reflects delin­quent or slow payments, current delinquen­cies or other negative items. Since lenders are required to re­port student loans to at least one credit bureau, your credit could be affected because of failure to keep deferments current or to make required payments. Bad credit will not only deny you access to loans for education, you will not be able to finance a car, a home, a practice, or much of anything else. Your credit must be protected at all costs, and that means mak­ing wise decisions and knowing where problems might arise.Remember:

• Do not use credit cards to extend your student budget
• Credit cards should be used with discretion
• Always review your credit report for any inaccuracies

Institutions and major retail stores report their customers’ credit information to national credit bureaus that compile the information in the form of a credit report.

Credit Scoring

Today most lenders may use a credit score to determine eligibility for a loan. This is a numerical score based on a statistical analysis of the data contained in a credit report. Lenders that use a credit score typically require applicants to meet a minimum score in order to qualify for their loan program.

Checking Your Credit

To order a free credit report annually from each of the three major credit reporting agencies, Equifax, Experian and TransUnion visit: annualcreditreport.com. You may also contact the individual credit bureaus below:

Credit Bureaus

• Equifax, (800) 685-1111
• Experian, formerly TRW, (888) 397-3742
• TransUnion, (800) 888-4213

 

For more information about credit bureaus or resolving credit problems, contact: Federal Trade Commission, (202) 326-2222.