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Archive | June, 2018

How to Protect Your Financial Security When You’re a College Student

How to Protect Your Financial Security When You’re a College Student

When you’re in college, everyone wants to offer you a credit card. Over two-thirds of Americans aged 18 to 24 have credit cards, according to the latest FICO statistics. Credit card ownership rises as students get older, with 43 percent of students aged 18 to 20 having cards, which rises to 63 percent for students 21 to 22 and 71 percent for students 23 to 24, according to a Sally Mae report. Overall, 56 percent of undergraduates use credit cards.

Having a credit card gives you more freedom to buy things, but it also exposes you to risks if you misuse your credit or if your identity gets stolen. Credit problems can affect your financial future, but with a little strategy and planning, you can build your credit while also protecting your finances while you’re in college.

How Your Finances Can Affect Your Future

If you want to buy a car or a home in the future, your ability to get financing will depend on your credit score. Your credit score is a measure of your ability to pay back money you borrow. It reflects your income, how well you manage money you borrow, and how reliable you are at repaying loans on time. Credit card companies, banks, car dealers, and mortgage lenders who are considering lending you money use your credit score to evaluate whether or not you’re a good risk. A high score makes you a better risk and more likely to receive a credit card or loan, while a low score makes you less likely to receive consideration.

Your score can go down if you borrow too much for your income level, if you spend too much of your credit limit, or if you don’t pay bills on time. It can also go down if someone steals your identity and spends money in your name. A bad credit score in college can keep you from getting credit cards, a car loan, or a mortgage loan after you graduate.

How to Build and Keep a Good Credit Score

The trick to building a good credit score is to borrow and repay enough to establish a good track record that proves you’re responsible with money, without borrowing so much that you can’t afford to repay it. In order to do this, one important strategy is to keep the amount of your credit line that you spend within manageable limits rather than maxing out your credit cards. Most credit card experts advise you not to spend more than 30 percent of your limit, but spending less will improve your score. Consumers with credit scores above 800 on the FICO scale, considered an excellent rating, generally spend only seven percent of their available credit.

In addition to keeping your spending within manageable limits, another major factor affecting your credit score is paying your bills on time. Always paying your bills on time will help maintain your credit score.

In addition, you can improve your score by taking out a loan and repaying it on time, which demonstrates that you’re responsible with debt management. Many banks offer small loans known as credit builder loans for this purpose.

How to Protect Yourself from Identity Theft and Credit Fraud

Another key to protecting your credit rating while you’re in college is guarding yourself against identity theft. Student identity theft is three times the average rate, and students are four times more likely to be taken advantage of by someone they know, according to Javelin Strategy & Research.

Protecting yourself against identity thieves requires following good online security practices. Lock your mobile device with a strong password or a biometric authentication tool such as facial recognition. For online accounts, use a password manager instead of typing in your password manually. Keep your operating systems and apps current with the latest versions and security updates. Use a secure connection such as a VPN when going online. Avoid transmitting financial data over unsecured connections such as public Wi-Fi hotspots, and only use encrypted sites featuring an HTTPS extension when making online transactions. Beware of email scams and bad links.

It’s also important to protect physical documents that may contain sensitive data. Make sure you pick up your mail promptly, and shred any financial documents before throwing them away. Keep important paperwork, such as your Social Security card, stored securely in a safe location such as a personal safe or a safety deposit box.

Monitoring your credit report will also help alert you if someone has stolen your identity. You can monitor your report automatically by signing up for an identity theft protection service. This type of service can notify you of suspicious use of your identity so that you can promptly alert credit bureaus to freeze your credit report. It can also help you recover your identity and limit your losses.

Be Strategic

Bad credit scores in college can hurt your ability to get a credit card or loan after graduation. You can build a good credit score by maintaining a low balance on your credit limit, paying bills on time, and building a history of repaying loans. Taking steps to guard yourself against identity theft, such as signing up for an anti-identity theft service, will also help you protect your credit score and your financial future.

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Does Refinancing Your Education Loans Make Sense?

Does Refinancing Your Education Loans Make Sense?

Each year millions of students graduate from college optimistic about their futures while at the same time facing the reality of heavy student loan debt. According to data from Experian, student loan borrowers carry an average of 3.7 loans totaling more than $34,000 in debt. Many want to find ways to ease that pressure.

Fortunately there are ways borrowers can regain their financial footing through refinancing their student loan debt. By taking stock of all the loans you owe, you can evaluate if refinancing makes sense for you.

Here are a few simple tips that should be top of mind when considering a refinancing option:

1. Take a look at all of the loans you have, from both private lenders and the Federal government. Calculate your current outstanding loan balances, interest rates and remaining payments. Then, find an online calculator (there are many out there, including the one on PNC’s Education Loan Center) to determine how much a refinancing option may save you on monthly payments and/or the term of your loan.

2. Know your complete financial picture. Loan approval and the terms of the new loan (if approved) are typically based on your credit and payment history. Know the requirements of the lender, which may include your financial and payment history and your current outstanding education loan obligations.

3. Fixed or Variable? Know the difference. Most lenders offer both fixed and variable interest rate options, so it’s vital to know which may best fit your financial situation. As the terms imply, a fixed rate stays constant over time and will not change, while a variable rate varies with the market and could change, up or down, over the life of the loan.

4. Look at the terms. Many lenders do not require application or origination fees and there is no prepayment penalty if the loan is paid off early.  Also consider whether the lender offers an interest rate deduction when payments are made directly from a checking or savings account or other rate discounts.

After considering all of these points, if you believe refinancing is the right move for you, take that step to help you achieve your long-term financial goals.

About The Author:

Today’s guest article comes from Naimesh Patel who serves as the General Manager for personal & student lending at PNC Bank

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