Page 329 - Keys To Community College Success

get analytical

EXAMINE CREDIT CARD USE

Complete the following on paper or in digital format.
Take a careful look at who you are as a credit consumer. Gather your most recent credit
card statements to prepare for this exercise. Answer questions 1 through 5.

1. How many credit cards do you have? For each, list the following:
■ Name of card and who issued it (for example, VISA from Home State Bank)
■ Current interest rate
■ Current balance
■ Late fee if you do not pay on time
■ Approximate due date for card payment each month

2. Add your balances together. This total is your current credit debt.
3. How much did you pay last month in finance charges? Total your finance charges
from the most recent statements of all cards.
4. Do you pay on time, do you tend to pay late, or does it vary?
5. Estimate how many times a year you pay a late fee. Looking at how much your
cards charge for late fees, estimate how much money you spent in the last year in
late fees.

When you’ve gathered all your information, analyze how effectively you currently use
credit. If you are satisfied with your habits, keep up the good work. If not, identify your
bad habits and write specific plans about how to change those habits.

score, you will have a higher APR (annual percentage rate) on your loan, and will ulti-
mately pay $110,325 more in interest charges—the cost of another whole mortgage.
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Even if a creditor uses another type of credit score, such as a VantageScore, your ratings on
different scoring systems will be comparable. Higher is better no matter what the system.
If you’re trying to keep your score in good shape, or if you need to get your score
back on track, look at Key 11.7 to get an idea of what affects it.
Many people go through periods when they have a hard time paying bills. How-
ever, paying late could lower your credit rating, resulting in several negative effects
including:

■ Increased rates of interest
■ Difficulty getting a loan for a home or car
■ Higher premiums with insurance companies
■ Obstacles to renting an apartment
■ An indication to a potential employer that you may be less trustworthy
■ Extra charges from utilities, such as a required deposit when opening an account

Building, maintaining, and repairing credit is an ongoing challenge. Three primary
credit bureaus (Experian, TransUnion, and Equifax) will send you a report containing your
credit score and credit history. You can obtain one free report per year, but charges are
incurred for any additional reports. For more information, see AnnualCreditReport.com.

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