Credit is the act of building debt and managing debt. How well you are able to do that will have a great amount of influence over your ability to develop additional lines of credit during your life. Every transaction you make on credit can affect your life in a positive or negative way. For more information on developing credit, visit Caution with Credit, a website sponsored by the Office of the Treasurer and Receiver General.

 

Credit Reporting

Your credit history and credit score reflects how well you manage your debt and is compiled on your credit report. Private companies called "credit reporting agencies" collect information related to your access to and use of credit. They make that information available to others under certain circumstances in the form of a "credit report." Your credit report is relied upon by lending institutions, employers, insurance agencies, and future creditors to make decisions about you. For this reason, your credit report is an important document, and the law gives you certain protections against the reporting of incorrect information. Knowing your legal rights and remedies is a first step to resolving any problems associated with your credit report. For detailed information about credit reporting, visit the Credit Reporting page on this website.

 

Building Credit

There are a number of ways that you can build credit, such as credit cards, services or utilities, or student loans.

Credit Cards

Credit Cards are easily available to college students and are often times viewed and used as a secondary source of income. According to a 2005 Nellie Mae study, 56 percent of undergraduates received their first credit card at age 18 and credit card usage increases as students get older. Only 21 percent of undergrads and 20 percent of graduate students reported paying off their full balances each month. Undergraduates, on average, carried $2,100 in credit card debt, while graduate students in their 20s carried $6,500. It is extremely important for credit card holders to know their rights and responsibilities associated with credit cards, to avoid trouble in the future. For detailed information, visit the Consumer Credit pages of this website.

Payments for Services

Payments for services might include cell phone, Internet, cable, or other utilities such as gas, water, and electricity. These payments are generally preceded by a down payment for services, and can vary depending on use. These services will generally come with a contract or agreement which outlines all terms of use, including items such as late fees or rates.

Payments in Installments

Any time you receive something with an agreement to pay a set price over a period of time, you are building credit. You will generally sign a contract, make a down payment, and will make set payments based on a payment schedule agreed up in your contract. Finance charges and interest are generally built into the payments. Students most commonly use installment credit when buying a car or renting an apartment.