Credit is an increasingly important part of medical student financial life. There
are stories of students seeking loans and finding that their adverse credit
ratings preclude their eligibility. This is particularly true of students
who have been working for some years, but even in college it is possible
to have developed a bad credit rating.
Limiting the amount of credit used is the most important strategy.
One credit card is enough and bills should be paid on time. Charging
more than can be paid in one month is a bad habit and can lead to problems
as the interest accrues. Additional financial aid will not be awarded
to pay off debts. Students are responsible for any debts incurred prior
to matriculation at the School of Medicine .
If a student cannot obtain a loan because of a negative credit rating,
School of Medicine funds will not be awarded to replace that loan. Therefore
it is recommended that you obtain a copy of your credit report before
matriculation to ensure that all information being reported is correct.
In order to obtain a copy, you can go to one of the web pages or write
a letter. Reports cost $9 which is payable by credit card (internet)
or a personal check or money order (letter). If you've been denied credit
within the past 30 to 60 days, you may obtain a credit report free of
charge.
There are three major automated credit-reporting
services nationwide from which banks get reports. Each has a local branch
or uses a local firm to provide credit data. The three major companies
are:
Any credit troubles are highlighted on your report by either
an asterisk or a box. They're considered “derogatory remarks” for
which most lenders will demand explanations before granting
credit. Repairing a credit report usually requires a written
explanation about why a particular account wasn't paid or was
paid late. If you don't have any reasonable explanations, you
will have to establish a track record of 12 to 24 months of
timely payments. Credit will also be an issue when loan repayment
begins. Lenders charge a stiff collection fee on top of principal
and interest if loan payments are not made on time. Defaulted
loans will be reported to credit bureaus and adversely affect
eligibility for credit cards, car and home loans, and loans
associated with setting up a private practice.
Tips for Maintaining Good Credit © 2003 by Access
Group, Inc.
The following tips can help you develop and maintain a strong
credit record; one that should allow you to borrow the funds
you'll need to fulfill your educational dreams and successfully
achieve your other long-term goals.
- Identify and write down your financial goals.
How much
will you need to earn to achieve your goals?
And remember, major goals like buying a house probably
will require that you have good credit so that you can
obtain a mortgage at a reasonable cost.
- Develop and follow
an affordable monthly budget.
Live below your
means while you're a student; learn to stretch
your dollars; be thrifty.
- Pay all your bills on time.
Just one late or missed
payment can have a noticeable negative impact
on your credit score, and the negative influence of
that missed payment can last for a number of months
after you've brought your account current. Most items
remain on your credit report for at least seven (7)
years, and if they're on your report they can influence
your credit score.
- Avoid charging more than you can
afford to repay in full each month.
Get in the
habit of using cash, not credit cards, whenever
possible. Credit card debt that carries over from month
to month can be very costly and may lower your credit
score.
- Check your credit report for accuracy at least
once a year.
Promptly notify the reporting
agency of any errors; it can take several months
to correct those errors.
- Maintain accurate financial
records.
Keep copies of all documents relating
to your financial activities. At a minimum you
should retain all loan documents until the corresponding
loan is fully repaid. These documents should
include the application, promissory note, disbursement
and disclosure statements, loan transfer notices,
and lender correspondence.
For more tips see page 20 of the Financial Aid Handbook.
A Final Word About Using Credit Cards © 2003
by Access Group, Inc.
You should be very careful about how you use credit cards.
In fact, it's probably best if you use cash rather than credit
cards when making purchases. Consumer credit is not an investment;
it's simply a means of improving your standard of living on
a temporary basis. Credit card and other consumer debts should
be paid off as quickly as possible. You also need to understand
that you won't be able to borrow additional education loan
funds (over and above the cost of attendance established by
your school) in order to pay your outstanding credit card debt.
Although it may seem that credit cards can make life easier,
that convenience can create a whole host of problems. Those
problems can include credit-related issuses such as missed
payments (resulting in a poorer credit score) as well as other
difficulties when stress caused by the credit card debt begins
to adversely affect academic performance and other aspects
of your life. Therefore anyone thinking about using credit
cards should know and understand the “Credit Card ABCs.”
- A credit card is helpful in emergencies, but emergencies
rarely happen at the mall!
- Buying something on SALE is still
SPENDING—not SAVING!
- Credit card debt is not an investment;
in fact, in reduces your ability to invest!
- Debt from credit cards can make it more difficult to
achieve your financial goals!
Credit Scoring © 2003
by Access Group, Inc.
Another measure that oftentimes is used to quantify how well
individuals have managed their credit obligations is credit
scoring. Credit scoring is a quick, accurate, consistent, and
objective method of determining the likelihood that someone
will repay a future loan. Fair Isaac and Company (FICO) first
developed the credit scoring methodology and currently is the
largest provider of credit scores to lenders. The “credit score” is
a numerical forecast based on information in a person's credit
report that focuses on individual borrower behavior. The higher
the score, the better.
Factors that influence a credit score include:
- Promptness in
paying bills
- Total debt
- Amount owed on all credit
card accounts
- Age of credit accounts
- Number of credit
card accounts
- Total available credit card limit
- Proportion
of credit card balances to total available
credit card limit
- Number of credit card accounts
opened in past 12 months
- Number of finance
accounts
- Occurrence of negative factors such
as serious delinquency, derogatory public records,
past due accounts that have been turned over to collection
agencies, bankruptcies, student loan defaults,
and foreclosures
Students Beware Identity Theft: The Fastest Growing
Crime in Our Nation Today © 2003
by Access Group, Inc.
What is Identity Theft? Identity theft occurs when an imposter
takes your personal data – usually your name, Social Security Number (SSN),
driver's license number, address and/or birth date – and uses it for his or
her own financial gain. This person may apply for telephone service, credit
cards or loans, buy merchandise, lease cars or apartments, and apply for a
mortgage. They might even use your identity to gain employment – working as
you.
What s considered sensitive information? Social Security
Number (SSN), driver's license number (DLN), address, date of birth (DOB),
mother's maiden name, bank account numbers, and employee numbers.
Anyone can become a victim of identity theft. Here are some
common sense actions that you can take to lower your risk and exposure
of this crime.
- Cross-cut shred sensitive papers before they go in the
trash. This includes pre-approved credit card offers, checks,
insurance benefit statements, bills, statements, anything
with barcodes.
- Guard your SSN – don't carry it and resist giving it
out unless necessary. Don't put SSN on checks.
- Check you
credit report once a year.
- Block your name from pre-approved
credit card lists – 888-5OPTOUT.
- Keep wallets and purses secured.
- Guard your personal information.
Carry as little as possible in your wallet. Get credit
cards with your picture on them. Make sure that conversations
cannot be overheard when exchanging sensitive information. Cancel credit
cards you no longer use.
- Password protect your computer. If you leave
it unguarded even for a minute, close the program you
were working on. Watch out for internet scams.
- Avoid placing
personal mail with checks, SSN or account information
in the unlocked outgoing mailbox (ie: receptionist's desk).
What should I do if I become an identity theft victim or believe
I might be?
- Call the three credit reporting agencies to assess the
damage. Place a fraud alert on your Social Security Number
and have them send you copies of your reports. Look them
over carefully for any fraudulent activity or inaccuracies.
- Call the police where you live. They need to take a report and give
you a copy. Send a copy of this report with any fraud
forms you send to creditors.
- Call and write all the creditors
who have opened fraudulent accounts. Send all correspondence
certified, return receipt requested. Tell them this is a case of ID
theft. Request copies of all application and transaction information
on the account.
Identity Theft Resource Center
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