What is a credit score?
A credit score is a three-digit number that calculates the risk a lender takes when you borrow money. This score is based on your credit report, and is generated by a mathematical algorithm. The Fair Isaac Corporation (FICO) credit score is used by 90% of lenders (source: myFICO.com).
Why is your credit score important?
Your credit score is an important piece of your personal finances. It helps lenders accurately predict your ability to repay a debt on time. FICO scores range from 300 to 850, and a higher number indicates a lower risk to lenders.
If your credit score is low/poor, it may be difficult to find a financial institution or credit card company to lend you money, and if they do, most likely the interest rate will be unfavorable. An increasing amount of landlords and potential employers are starting to check credit scores before leasing or hiring, and insurance companies may check credit scores when determining your premium costs.
How can I access my credit report and credit score?
As a consumer, you have access to a free annual credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) using annualcreditreport.com. Unfortunately, your credit score is not included on your credit report. To obtain your credit score number, you would need to purchase it from a score provider or one of the major credit bureaus.
For additional information on credit and credit management, students should visit the UWW Financial Literacy Center’s website or schedule a financial coaching session today!
When discussing financial aid, commonly used terms include subsidized and unsubsidized, but what is the difference between those two words in regards to student loans?
Direct Subsidized Federal Loans are available to undergraduate students who demonstrate financial need. The US Department of Education pays the interest on your loan while you are in school (at least half-time status), for the first 6 months (grace period) after you leave school, and during any deferment (postponement) periods.
Direct Unsubsidized Federal Loans are available to undergraduate and graduate students. Demonstrating financial need is not a requirement. You are responsible for paying interest during the life of the loan. While in school, during the grace period, and during deferment or forbearance, you may choose to let your interest accrue, as opposed to making payments. The accrued interest is added to the principal of the loan.
For more information, visit the Federal Student Aid website, the UWW Financial Aid Office, or the UWW Financial Literacy Center.
Starting to budget while in college can result in learning how to manage money and plan for the future. Here are 4 simple tips to creating and maintaining an effective budget:
- Track spending. Record every penny you spend for at least a month before creating a budget. Be honest about where you are spending your money, and keep a spending log.
- Identify Income and Expenses. Use a budgeting worksheet to document your income, then expenses. Income sources would include student loans, job earnings, gifts, and more. Expenses should come directly from your spending log, and broken into categories like housing, food, entertaining, etc.
- Do the Math. Calculate income minus expenses. If you have money left over, consider adding to your savings account or an emergency fund. If you calculate a shortage, start identifying categories where you can cut back. This is a good time to question your needs versus wants.
- Reexamine and Adjust. Income and expenses change over time. Maybe you received an additional scholarship, or your landlord raised the rent. When changes occur, it’s time to reexamine and adjust your budget to stay on track.
The UWW Financial Literacy Center has many free budgeting resources available to students. Visit our website, or schedule a financial coaching session today!
It’s now August, and many families are seeking the total price tag for this upcoming year’s college education. Here at UW-Whitewater, the Cost of Attending Calculator allows students to select personalized options to obtain an estimated total cost of attending dollar amount. Variable choices include student status, type of housing requested, meal plan purchase, and parking. Although just an estimate, this information can be used by families when making financial plans.