Whenever I have had the opportunity to speak to college students about finances and credit, there seemed to be a handful of questions that were asked more frequently than others.  Most of the questions had to do with credit and credit scores.  Once, when I was speaking to a freshman class, a young lady asked me how she could improve her credit.  I was shocked.  How could someone so young need to improve her credit already?  In the past, young people could get credit cards more easily than they can today.  But on May 22, 2009, President Obama signed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 which marked a turning point for American consumers and ending the days of unfair rate hikes and hidden fees.  

The CARD Act of 2009 cleaned up credit card practices at universities to protect young people from getting over their heads in credit card debt.  The act contains new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.  The act also restricts the issuing of credit cards to people under the age of 21 unless they can prove an income and/or get a cosigner over the age of 21.  Card offers can no longer be mailed to people of student age, either.

How can I improve my credit score?

Improving your credit score will take some time and there is no quick fix.  Keep in mind that your credit score reflects payment patterns over time, with more emphasis on recently reported information as opposed to older information in your credit report.  In order to improve your credit score, focus on the following tips:

Always pay your bills on time.  Delinquent payments and collection items have a major impact on your score.

Get a free copy of your credit reports by going to www.freeannualcreditreport.com.  This is the true website for getting a free copy of your credit report from all 3 credit reporting agencies (Experian, TransUnion and Equifax) without having to provide a credit card number and enrolling in a monitoring plan.  There may however be a small charge for your credit score.  By obtaining your credit reports and finding out what is contained in each, you have a better handle on what needs to be “cleaned up”.  It’s also important to make sure information is reported properly and the information contained in each report actually belongs to you.  

Do dispute inaccurate information.  Your credit score is based on the information in your credit reports so errors will negatively affect your score.  Contact the credit bureaus immediately to report late payments, charged off accounts, and collections that are not yours; credit limits reported as lower than they actually are; accounts listed as “settled,” “paid derogatory,” “paid charge-off’ or anything other than “current” or “paid as agree” if you did pay on time and in full; accounts listed as unpaid that were included in bankruptcy; negative items older than seven years (10 years in the case of bankruptcy) that should have automatically “fallen off” your reports.

Pay down your credit cards.  Paying off credit card balances typically affects your credit score more than paying off installment loans such as car loans and student loans because they are revolving accounts and can be used over and over as they are paid down.  Once an installment loan is paid off, you are done with it.  Concentrate on paying down limits rather than cards with the highest interest rate.

Use your oldest credit card.  The longer you have established credit, the better.  You may be tempted to close an old credit card because you don’t use it, but don’t!  Believe it or not, this could negatively affect your credit score.  Keep the card open, but use it once in a while just enough so you can pay it off when the bill arrives.  If you don’t use the card, it will still appear in your credit reports, but the issuer may stop updating the account.  Cards with no activity are not given as much weight in the credit-scoring formula as active accounts.  

Once you have established credit, you will have a credit score.  If you always pay your credit payments and bills on time, use credit wisely and don’t get over your head in debt, you should maintain a good credit score.Smart Money offers tips and information on money, finances and credit.  It is written by Stacie Richardson who has worked in the banking industry for 20 years.  Stacie currently works in the Loan Operations Department at First Community Bank, 600 SW Railroad Ave., Hammond, LA.

Stacie Richardson has over 20 years experience in the financial industry and is a certified Money Management International volunteer. She currently works for First Community Bank in Hammond.