Page 328 - Keys To Community College Success

making sure no one sees you enter a PIN, only using
secure sites when shopping with your credit card
online (they begin with an “https” instead of “http”),
and avoiding giving out your Social Security number
unless absolutely necessary. 17

The best way to avoid problems is to read the fine
print, pay attention to your balances, and pay your bills on
time. Keep in mind that using a debit card is a smart alter-
native to paying on credit. A debit card is connected directly
to your checking account. When you use it to withdraw
cash from an ATM or to pay for your purchases at the reg-
ister, the money comes right out of your checking account,
so every purchase made with your debit card appears on
your bank statement. This helps you track your purchases.

Manage Credit Card Debt
To maintain an accurate perspective on where your money goes,
keep credit card receipts and include those purchases as you Many older students are familiar with the pros and cons
track expenses. of credit, and may already work hard to focus credit card
use on items they or their families can’t do without. How-
ever, even if you limit your card use to needs, you can still
get into trouble. Debt can escalate quickly and can even lead to personal bankruptcy—a
major blot on your credit that can last for years, and one to avoid at all costs. A few
basics will help you stay in control.
■ Choose your card wisely. Look for cards with low interest rate cards, no annual
fee, a rewards program, and a grace period.
■ Ask questions before charging. Would you buy that item if you had to pay cash?
Can you pay the balance at the end of the billing cycle?
■ Pay bills regularly and on time, and try to make more than the minimim payment. Set
up a reminder system that activates a week or so before the due date. You can create
an e-mail alert through your card account, make a note in your datebook, or set an
alarm on your electronic planner.
■ If you get into trouble, call the credit company and ask to set up a payment plan. You
may even be able to make partial payments or get a reduced interest rate. Then, going
forward, try to avoid the same mistakes. If you still need help, contact the following
organizations for such help: National Foundation for Credit Counseling or American
Financial Solutions. Note: These organizations do not charge for their services.
■ Shred credit cards when you close an account or if you feel you have too many cards.
Remember, even though you’ve destroyed the card, the debt attached to it remains
until you’ve paid it off in full and sent a written statement to the company asking to
close the account.

Build a Good Credit Score
CREDIT SCORE
A measure of how likely Your credit score is a prediction of your ability to pay back debt. If you’ve ever bought
you are to pay your bills,
a car, signed up for a credit card, or purchased insurance, the deal you got was related
calculated from a credit
report using a
standarized formula. to your credit score. If you rent an apartment, sign up for a cell phone plan, connect
utilities at your home, or apply for a job where you are required to handle money,
someone will examine your credit score.
Most credit scores are called FICO scores, determined by the Fair Isaac Company
CREDITOR
from a credit-scoring scale running from 300 to 850. Your number gives creditors an idea
A person or company
to whom a debt is owed, of how reliable you are. In general, having a higher score is related to getting better interest
rates. For instance, suppose you have a score of 520 and another person has a score of
usually money.
720, and both of you have a $100,000 30-year mortgage. Because of your lower credit
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