Home & Family Finance Resource Center
Wednesday, November 25, 2009
August Financial Fitness Challenge—Earn and Keep Your Best Credit "Grade"
Susan Tiffany, CCUFCA friend asked me last week about her son's credit score. "It's 720," she said. "That's pretty good for someone his age, don't you think?"
Dan is a 20-year-old college student in a Western state. And yes—720 is pretty darn good for someone his age with limited credit experience. You may have seen reports in recent months about the new "excellent" credit score now edging up to about 760. And if you were about to buy a house that would be true. But for a 20-year-old, 720 is a great start.
Your credit score counts for a lot
Dan's mom and I talked more about the importance of keeping that credit score solid and even improving it. She was surprised, for example, when I told her that:
- Dan's future employers may make some hiring judgments about him based on his credit score. Half of employers now check the credit of potential hires, according to the Society for Human Resource Management.
- A landlord, similarly, may decide whether or not to lease him an apartment based on credit score.
- Even car insurers or other property insurers will base his premium and even the decision whether or not to insure him on that score.
Right now, when students are returning to campuses across the country, is an ideal time to talk turkey to your young adult son or daughter about the importance of building and protecting a credit score from the get-go.
Remember your first credit card, and what it was like to have seemingly "free money" in your pocket and all kinds of enticing things to spend it on? Do you remember being shocked, for example, when you'd used that card to outfit your dorm room—and then the bill arrived? Talk to your newly independent young adults and help them differentiate between needs vs. wants. Introduce them to the idea of creating a spending plan to guide their money management. And make your rules clear—no bailout means no bailout.
Help on campus, on the job
Enlist help from resources on campus or at work to help your young adult make a good start financially.
- Recommend the credit union for the best financial services, savings yields, and loan rates, along with reliable money management advice. Your student or young worker may elect to stay with your family's credit union—it's easy to use out-of-town financial services these days, with online account access and account transfers. If that won't work, make sure your son or daughter checks out the campus credit union and its services, which may include special accounts for students and lots of support getting started.
Recommend the credit union for the best financial services, savings yields, and loan rates, along with reliable money management advice.
- Encourage your student to look for a personal finance course on campus; otherwise, all his or her money management education will occur outside the classroom—and may prove more costly than necessary, today and in the future.
- Help your son or daughter locate peer-to-peer or other financial counseling available to students, and make sure your student knows when to use it.
- If your young adult is bypassing higher education and is already in the workforce, suggest the employer's EAP (employee assistance program) as a reliable source for personal finance help.
And if you have younger sons and daughters, find opportunities now to help them become confident about their ability to manage money. It can save them—and you, too—a lot of money and heartache.
Financial Fitness Challenge
Remember to register for the Financial Fitness Challenge. Each month we'll randomly select five winners to receive $50 Visa gift cards; we'll choose each month's winners only from that month's entries, so enter often.
ST
Susan Tiffany, CCUFC
askem@cuna.coop
