2008 Woodie Awards
What's your credit score worth to you?
Joseph Cacciapaglia ; Guest Columnist
Issue date: 4/20/05 Section: Opinion
Applications overflow your campus mailboxes. "You are pre-selected to be pre-approved," and other similar phrases are all too familiar. If you sign up, you can probably get free movie tickets or a credit card design to "fit your personality." Companies even set up tables on campus seducing you with free gifts. For college students, credit cards are everywhere. You can't to get away from them no matter how hard you try.
Okay, so most of you don't try to avoid them. The statistics speak for themselves. According to a PBS report on Frontline, more than 641 million credit cards are currently in circulation, plastic that accounts for an estimated $1.5 trillion in consumer spending.
Yet there is a good reason that credit card companies target you. They know you don't fully understand their fine print, and they know you will make them a lot of money. So, how can you protect yourself? You can learn about credit, and how to maintain a good credit score.
For most of us, talking about our credit score is like talking about a mind-numbing class-it's very confusing, a little boring and we just don't like to do it. Unfortunately, unlike half of what we learn in school, our credit scores will actually affect the rest of our lives. For example, let's say you are planning to buy yourself a new car, and let's assume that after putting down a huge down payment, you plan to finance about $10,000. If you have a credit score more than 680, what they consider the "prime" category, you have a good chance of getting an interest rate of 0-2.5 percent. But if your score is under 680, or "sub-prime," you could have to pay up to 24.99 percent interest. What's the big deal, you say? Well, the difference between a zero percent loan and a 24.99 percent loan ends up being $5,952 after only four years. Now, for some fun optional homework, you should figure out how much extra you pay when purchasing an average house ($250,000 in Baton Rouge), with a 30-year mortgage. I'll give you a hint: It's a lot.
Okay, so most of you don't try to avoid them. The statistics speak for themselves. According to a PBS report on Frontline, more than 641 million credit cards are currently in circulation, plastic that accounts for an estimated $1.5 trillion in consumer spending.
Yet there is a good reason that credit card companies target you. They know you don't fully understand their fine print, and they know you will make them a lot of money. So, how can you protect yourself? You can learn about credit, and how to maintain a good credit score.
For most of us, talking about our credit score is like talking about a mind-numbing class-it's very confusing, a little boring and we just don't like to do it. Unfortunately, unlike half of what we learn in school, our credit scores will actually affect the rest of our lives. For example, let's say you are planning to buy yourself a new car, and let's assume that after putting down a huge down payment, you plan to finance about $10,000. If you have a credit score more than 680, what they consider the "prime" category, you have a good chance of getting an interest rate of 0-2.5 percent. But if your score is under 680, or "sub-prime," you could have to pay up to 24.99 percent interest. What's the big deal, you say? Well, the difference between a zero percent loan and a 24.99 percent loan ends up being $5,952 after only four years. Now, for some fun optional homework, you should figure out how much extra you pay when purchasing an average house ($250,000 in Baton Rouge), with a 30-year mortgage. I'll give you a hint: It's a lot.