How Credit Reporting Agencies Can Help Graduates

Recent college graduates likely have a lot on their plates once they get out of school, and may not consider the many ways in which their credit score will affect them in their everyday lives as independent adults, but taking the time to deal with what could be a diminished standing can serve them well in many areas of their lives.

While they may not have a lot of familiarity with how credit works in general, making efforts to improve their credit scores can seriously behoove recent college graduates because it will set them up for years or even decades of healthy finances, and give them a greater potential for success in their careers and daily lives. This is because it's no longer just lenders who use a person's credit rating; all sorts of other companies, even those to which a person might apply for a job, now do so as well in much the similar way to financial institutions.

What a good credit standing can mean
In general, people who have good credit scores and are in good standing with lenders will likely be able to reap numerous benefits from the fact that they've handled their finances properly in the recent past.

Lenders use this information to determine a number of things about a potential borrower when they apply for a new line of credit, whether it's a credit card, auto loan, or even mortgage. First, credit standings will simply be used to tell the financial institution if borrowers are eligible for the credit for which they are applying, and usually there's a simple cutoff for what credit score will be acceptable to obtain that financing. Moreover, though, it will also be used to determine the terms of that credit; the better a person's standing, the more likely this individual will be to get improved terms. For instance, those with the highest scores in general will receive the lowest interest rates and far fewer fees — perhaps none at all — because lenders can see from their standings that they're trustworthy.

This can be crucial to young borrowers in particular because it will set them up for low rates and few fees on accounts they might have for years or more, allowing them to save as much as possible for long periods of time.

In addition, many companies, including utilities, landlords, and cellphone service providers use a person's credit report (they can't check one's score) to determine whether he or she will be able to obtain the services these organizations provide. But where having a good standing may be most important outside of financing is that many employers are now using credit standing to determine whether an applicant is eligible for the position for which they applied. While some states now outlaw the practice, many do not, and companies say it allows them to determine whether a potential employee is trustworthy. For this reason, recent graduates in particular might want to do a little credit repair work to make sure they're not going to be denied a job because they've missed a few credit card or auto loan payments in the past.

What happens if it's bad?
Unfortunately, the opposite of the above is true for those with lower credit standings. They may be denied for any new lines of credit they want, and those they obtain will likely be far more expensive than they might have wanted, thanks to higher interest rates which can add thousands in charges over the life of the loan, as well as more fees. Further, those with lower scores might not be able to find the housing they want, services they need, or even jobs that will sustain them for years.

As such, it might be wise for recent graduates to do a little credit repair work, which will bolster their standing overall and improve eligibility for everything. One way in which they may be able to do this is by ordering copies of their credit reports and reviewing the various accounts listed in their name. Any that are carrying too large a balance or have missed payments in the past several months should be addressed with possibly contacting a credit repair law firm for assistance in challenging these types of accounts in an effort to correct your credit history.

Another potential benefit that checking credit reports regularly can provide is that it will help borrowers to learn about whether or not there are any potentially unfair markings that might be having a negative impact on their standings overall. If any such entries are discovered, it might be advisable to contact a credit repair law firm and work with them to potentially resolve the issues as quickly as possible, and return a borrower's standing to where it deserves to be.