Protect Your Credit
Check Your Credit Report Annually
You can get a free credit report once a year from each of three consumer credit reporting companies: Equifax, TransUnion, and Experian. Know what creditors can see and what may be impacting your ability to borrow in the future. Check for errors and signs of identity theft. Also be aware of strategies to Avoid Identity Theft (PDF) and how to report fraud to the credit bureau, the Federal Trade Commission (FTC), and the police
Use Credit Cards Wisely: 10 Tips for Students
- Read the fine print. Avoid "easy credit" traps like hard sells and freebies for signing up.
- Don t count debt (student loans) as income when applying for credit.
- Don t co-sign for a friend. Don t be responsible for their mistakes in the future.
- Pay attention to the APR (interest rate) and annual fees. Not all credit cards are created equal.
- Keep it simple: carry only one credit card.
- Only apply for credit that you need.
- Pay in full every month and avoid cash advances.
- Watch out for rewards.
- Be cautious with cards advertised to students.
- Know when to ask for an increase in credit. Only ask for what you can repay.
Avoid Payday Loan Traps
Payday loan and check cashing businesses offer you cash upfront for a check that is postdated to the date of your next payday. You can either wait for the withdrawal, or you can bring cash in exchange for the check. For about a 15% fee, you can quickly and easily get cash when you need it. However, this quick solution can cause more problems if you're not careful.
- First, though a 15% fee may not seem like much, it's a 15% cut in pay in exchange for getting the cash sooner. A $100 cash advance with a $15 fee (15%) is the equivalent of 391% APR interest rate.
- Second, many borrowers end up taking out a new loan to cover the first when they do not have the cash to pay it off. If you are already a paycheck behind in your expenses, how will you be able to catch up? This can quickly turn into a vicious and expensive cycle. Instead, think about ways to reduce your expenses so you can stop living paycheck-to-paycheck.
- Third, if you do not have the funds the date the check is postdated and do not reclaim it, you may be subject to fraud charges in addition to bounced check fines. The bad check law for Kentucky is: Up to $500 fine. One year in penitentiary for a misdemeanor. Felony punishable by imprisonment from one to five years and a fine of not more than $10,000, or double the offender's gain from commission of the crime, whichever is greater. (Learn more at www.ckfraud.org.)