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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