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Credit Scores for the Graduate

Posted on 2016-07-07 09:00:48

Three young graduates pump their fists in the air outdoors and celebrate their achievement If you are a 2016 graduate, you probably know your GPA. You may have seen it fluctuate during your school years, and there may have even been times when it was of concern to you. Was it too low to get you into a certain school? Was it going to limit scholarship opportunities? Could it affect you in ways you don’t even know? With graduation behind you, thoughts of your GPA may be behind you also. But when you enter the post-graduate world, you have a new sort of GPA—your credit score. Like your GPA, it’s a number you should track and be aware of as it changes. Information in your school transcript was used to calculate your GPA. The information in your credit report is used to calculate your credit score. Let’s take a look at both credit reports and credit scores.

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Credit Reports Credit reports are maintained by credit bureaus (also known as credit reporting agencies). The three major national credit bureaus are Equifax, Experian and TransUnion. Credit bureaus are private, for-profit companies that collect information from creditors about how you pay your bills. They also gather information from public records, so things like bankruptcies and liens can show up on your credit report. Creditors are not obligated to report to the credit bureaus, but most are happy to do so because they also benefit from the information others provide. Simply put, your credit report is a collection of information that tells the story of how you handle credit over time. It lists your accounts and how much credit is available to you, your outstanding balances and tracks whether or not you pay on time. Negative information can stay on your credit report for 7 to 10 years, though the impact of negative information should diminish over time. Credit Scores Your credit score is a three-digit number that sums up the information in your credit report. It provides lenders and others with a quick way to analyze your credit history and your predicted credit risk. As the information in your credit report changes, your credit score changes.   Why Credit Scores Matters Credit scores give lenders a quick and unbiased way to make credit decisions. Your credit score can determine the credit terms you are offered including interest rate. Don’t make the mistake of ignoring your credit score. It can affect your life long after you’ve forgotten your GPA.  

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