Potential Magazine summer 2013 | Page 16

appy+healthy life skills college 101 life skills life skills tips & advice trends resources all about credit scholarships parent to parent PLUS or Minus? PLUS loans are federal loans that parents of dependent undergraduate students can use to help pay education expenses. Fix It Up Illustration by heather cooper The good news is, bad credit can be repaired and your credit score boosted. Your primary focus needs to be on improving payment punctuality and decreasing your overall debt. To do this effectively, you may want to create a structured budget, which should help you find places where you can cut back and control your spending. By keeping your debt payments steady, you can see your score improve in as little as six to eight weeks. But sometimes no credit is as damaging as bad credit. To help your teens learn the responsible way to pay down debt and deal with a loan, as well as, establish a credit history, consider a loan program like the Credit Matters Loan offered by Guardian Credit Union. And since every Guardian member is eligible, regardless of their credit score, it can also help parents repair poor credit. Jessica Pigg at Guardian explained how it works. “The Credit Matters Loan is a $1,500 share-pledged loan that you repay over a 12-month period. The loan proceeds are first placed in a restricted savings account, and as you make monthly payments on the loan, funds from the savings account become available for your use,” she said. “You can also choose to keep those funds on deposit and build a great savings plan at the same time. Your successful payment history on your Credit Matters Loan will be reported to the credit bureaus, which can positively impact your credit score.” Common Credit Myths The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program. Just like any loan, PLUS loans require a credit check. But even if you clear the check, several expert sources are warning that the PLUS program may not always be the best choice as it has highNearly a million er interest rates than a student parents took out loan and allows PLUS loans last year. you to borrow On average, they large amounts of borrowed money, up to the full amount of your $12,000. teen’s tuition, with little regard to income or other debts. This makes it easy to get in over your head. Also, PLUS loans can’t ever be turned over to your child, meaning you are responsible for the full amount until it is paid off. As with everything, do your homework to see what type of loan is right for you. IllustrationS by heather cooper Paying your bills on time guarantees a good credit score. Closing my unused card will boost my credit score. Paying your bills on time accounts for 35 percent of your credit score, but it’s only one piece of the pie. Also watch your card balances. Your card balances in relation to the credit limits can have a significant impact on your score. 16 Checking my own credit score will hurt my credit score. Reviewing your own credit report counts as a “soft inquiry” and therefore has no impact. “Hard inquiries,” which source when you apply for credit, can hurt your score if you are excessively shopping for credit. This strategy can actually backfire and cause your score to plummet. Closing a credit card closes off the available credit limit associated with the account and can cause a spike in your revolving utilization, which can drastically lower your score. www.potentialmagazine.com