FRONT PAGE

CAMPUS NEWS:
     NE-10
    PAC
     SUNFLOWER
     SUSPENSIONS
     SOFTBALL
    
SPORTS:
     SCORES
  
SENIOR PROFILE:
     BONESTEEL 
   
A&E:
     GRAMMY'S

BLOG:
     DEBT

PROF:
     SMITH

HOMETOWN HERO:
     GILBERT

PAST ISSUES

How to Get Out of Debt and Rebuild Your Credit

by Amy Marie Santana
Exchange Staff

     Did you know that a poor credit choice, such as a late payment or going over your limit, stays on your credit report for seven years? This, in turn, can affect your chances of getting approved to live in the apartment of your choice or even cause you to be turned down for a car loan. Even some employers are beginning to look at their prospective employees' credit histories as a more accurate view of how reliable they are.

     It's well-known that college students tend not to have very much money. Therefore, it shouldn't be a surprise that they are targeted by credit card companies, receiving an abundance of tempting offers, many times with high credit lines. Sure, one might say it's only one card or that it's for "emergencies only," but as soon as you make that first purchase that is unnecessary yet so easy to make, you're hooked. It may start off as just charging a Spring Break trip or even buying books. But paying with credit can be dangerous for someone who otherwise wouldn't have the money in the first place.

     Soon you start to accept more offers, and for some reason, they still keep coming. The latest trick companies are using are periods of zero percent interest for six to twelve months. So what do you do once you've realized that you're in way too deep? How do you save yourself from the embarrassment of being rejected for your first home or car just because of the mistakes you made when you were younger? First thing's first: vow to stop using the cards. Chop them up, if it helps. Once you've decided to commit to rebuilding your credit, there are a few steps that you can take.

     Step number one: Check your credit report. Find a company where you can get a free copy of your report, such as www.annualcreditreport.com. This gives you access to three different credit reporting bureaus where you can order a free copy of your current credit report, with a limit of one yearly. Once you gotten the report, check it thoroughly for any mistakes, any lawsuits listed that you weren't involved in, or any accounts that remain open although you remember closing them. If there is anything that seems incorrect, or if it is missing crucial information, such as an on-time payment, contact the bureau right away. They will be happy to work with you if there is suspected fraudulent activity.

     Step number two: Commit to paying ON TIME every month. Try finding a nonprofit debt consolidation service, such as www.consolidatedcredit.org. They will work with creditors to lower your interest rates. The reason for this is that credit card companies save a lot of money on collection calls this way. Debt consolidation will allow you to make one monthly payment that will be dispersed toward all your accounts, rather than having different interest rates and several different payments.

     Step number three: Get a new card. Unfortunately, the only way to rebuild credit is with credit. Creditors like to see that you have a consistent payment history. Be sure to carry a small balance on the card and pay it every month. Try paying every two weeks, if possible, this way you're sure to never miss a monthly payment. If you don't think you can trust yourself with a new card, try applying for a secured credit card. These are prepaid credit cards to which you deposit an amount of money, and your limit is the amount deposited. You may be wondering how this is different from using a regular debit card. The answer is that when you use a secured credit card, although it is prepaid, creditors see it as a regular credit card on your report. Be sure to wait, though, until you are truly committed to rebuilding your credit, otherwise, you may end up right back where you started.

     Step number four: Don't mess up again. Start by planning out a budget. There should be an equal ratio between how much money you make and how much money you're spending. Never spend money you don't have. Automatically deduct money from your monthly income for necessities such as food and bills. Then, put a small amount away for savings and limit your spending. Try learning about the Latte Factor, a system in which saving as little as five dollars a day has been shown to add up into big bucks. The Automatic Millionaire by David Bach can teach you many tricks on how to save, giving you an alternative to credit for those sudden rainy days.

     Information verified through: www.nolo.com