Avoid bankruptcy because it does not discharge student loans, child support, secured debt, or income taxes. It goes on your record for 10 years and may hurt parents' credit rating if they co-signed in the past. It can also keep you from getting a mortgage for a house, credit at reasonable rates, a job, or from being promoted. In many cases, bankruptcy is like using a canon to kill a fly. There are other ways at less expense (filing costs $500 to $700 dollars or more) to solve over-indebtedness.

Some alternatives would be to work off debts by providing labor such as painting to a debtor, get a second job just to pay off debts, buy a used car and pay the difference in payment for a new car toward a debt, or arrange a new payment schedule in time and amount with your creditors by writing them the new plan and follow through with the new amounts, asking them to waive interest. Contact a reputable not-for-profit agency offering a debt repayment program with creditor concessions such as reductions in fees and interest.

Build Your Credit Record

Your credit report is often called "your second resume." Positive information can stay on it forever. Negative information usually stays on your credit report for seven years. (Bankruptcy stays on ten years.) A credit report is a record of your bill-paying history, and it is one of your most important – yet misunderstood – financial documents. Check your local telephone directory for the county office of the Cooperative Extension Service for educational brochures on credit; and local credit bureaus for faster credit reports.

Your credit rating is your reputation. Employers, creditors, and leasing agents check your credit rating. It can affect job prospects, ability to obtain loans at lower interest rates, ability to buy a house or other large items, ability to rent an apartment, ability to get insurance, and income due to garnishment of wages and tax refunds (money taken out for payment before you receive the remainder).

Get Credit Reports from all major agencies

Check annually and correct any mistakes. There may be a cost (varies) unless you have been denied credit or insurance within the past 60 days, if you unemployed, seeking employment,or are on public assistance in which cases you can get a free report.

Order your credit report from each of the main credit bureaus: (See illustrations later)

Equifax Credit Information Services, P.O. Box 105873, Atlanta, GA 30348
800-685-1111

Experian, National Consumer Assistance Center, P.O. Box 2104, Allen, TX 75013-2104
800-682-7654

TransUnion, Consumer Relations Center, P.O. Box 390, Springfield, PA 19064-0390
800-888-4213

1-877-322-8228 is the central source for annual credit report

Remember that not every credit report has the same information on it. Your utility company may report your bill-paying history to Experian but not to TransUnion.

If you find incorrect information, complete a dispute form to have it corrected. However, correct but negative information can stay on your credit record for up to seven years. and cannot be removed. Make sure that incorrect information is removed from all credit reporting agencies' reports.

A good credit rating may be needed to qualify for graduate school financial aid.

CASE STUDY USING LOAN CONSOLIDATION WORKSHEET

COMPARING CREDIT COSTS

CREDIT REPORT REQUEST FORM

CREDIT REPORT DISPUTE FORM

Control credit or it will control you. Control your finances and you will control your life. Credit can enhance for immediate pleasure but it can also destroy and enslave for life. There is both credit misinformation AND great information on the Internet. There is intense marketing of credit cards to students, easily available and very persuasive. New scams arise quickly. Credit doctors, credit repair agencies, and payday loan companies are under investigation. Beware of "too-good-to-be-true" plans. High-cost rent-to-own businesses charge rent that if converted into percentages would be extremely higher than other credit arrangements. Payday loans can have effective annualized interest rates of several hundred percent.

Credit postpones solving the problem of keeping expenses below income. It costs more over time even at a lower interest rate if you consolidate. Reject the buying frenzy dictated by the media. The enemy is the pressure to rely on credit and then consolidate.

Redefine the good life your own way. You have worked and studied hard to get into college. You deserve to be in control with financial peace of mind rather than buy with credit every pleasure, activity, or material thing desired, for now anyway.

Protect your future financial freedom and the flexibility of choice with wise use of credit.

Credit Section I / Section II / Section III Section IV Advance to Housing, Vehicles & Equipment Return to Management

Family - Government & Community - Education & Skills - Employment - Management - Credit - Housing, Vehicles & Equipment - Insurance - Savings - Investment - Financial Planning
Ability to Adjust

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