Source: Jodi Kaus, 785-532-2889, jkaus@k-state.edu
News release prepared by: Calin Cooney, 785-532-2535, media@k-state.edu

Thursday, Oct. 28, 2010

ESTABLISHING GOOD CREDIT CAN HELP YOUNG ADULTS IN TODAY'S ECONOMY

MANHATTAN -- Establishing good credit -- including a good credit score -- is important for college-age students, according to a Kansas State University financial counseling expert.

A credit score measures an individual's credit worthiness as assessed by moneylenders, said Jodi Kaus, program manager for K-State's Powercat Financial Counseling.

Without good credit, individuals may find it hard to meet certain needs that go beyond credit cards. Individuals with low credit scores may be denied loans and receive harsh premiums on insurance rates. Credit scores also can affect employment, since potential employers can check them to assess the responsibility of an individual, Kaus said.

"A FICO, or Fair Isaac Corporation, credit score ranges from 300 to 850, with a number in the mid-600s and above considered good," Kaus said. "The score is based on your payment track record, the amount of debt you owe, the length of time you've used credit, how often you've applied for new credit and the types of credit you currently use."

Establishing a credit score in today's economy goes a long way, Kaus said. It has been reported that more than 43 million people now have credit scores below 599 because of the slow economy. This means fewer people are being considered credit worthy.

"Young people need to remember that the actions they take today will affect them for some time down the road," Kaus said. "Paying bills late, maxing out credit cards or opening multiple credit accounts will all impact your ability to get favorable loans in the future."

Young adults can be financially successful if they can establish a respectable credit score, Kaus said.

"In your last years of college it may be beneficial to begin establishing a credit history. This shows you have the discipline to make timely payments over a period of time in anticipation of when you do need a loan," Kaus said. "Since how long you've used credit is a factor in your credit score, some length of credit history needs to be established."

Kaus recommends these tips for young adults who are ready to establish credit responsibly:

* Pay all bills on time, including utilities, cell phone and credit accounts.

* Limit the number of credit cards you maintain.

* Use your credit sparingly by staying under 30 percent of your credit limit.

* Check your credit report regularly at http://www.annualcreditreport.com, which is available for free once a year from each of the three credit reporting agencies. However, the report does not include one's credit score.

K-State students seeking help with credit issues can use Powercat Financial Counseling, a free service for students to obtain confidential financial counseling on any money questions they have. Appointments can be made by going to the service's website at http://www.k-state.edu/pfc.

"We are helping many students stay on track financially by creating a spending plan," Kaus said. "We answer questions about proper use of credit, planning out student loan accumulation and repayment of loans, and we counsel students about making the financial transition from college to work.

"We also can help a student get their credit report and understand the information shown on the report," Kaus said. "We then counsel the student on ways to improve their credit worthiness and to stay on track with their credit use."