Being on your own can be fun and exciting but when you become 18 your parents don’t have to bail you out ﬁnancially — it’s their choice. The decisions you make today about money will affect you in the future.
Q: What’s so bad about credit cards?
A: Credit cards are not the same as cash – you may have to pay annual fees and other charges to use them. With some cards, you may be charged interest for the time between your purchases and your payment – even if you pay your bill in full. Interest and ﬁnance charges are set by the banks and retailers who issue the cards and vary with different kinds of credit cards.
Q: Someone ripped my cards off... what now?
A: Immediately report the loss or theft of a credit card to the bank or company that issued it. If it’s not promptly reported, you may be responsible for up to $50 of unauthorized charges on the credit card.
Q: What is a credit report?
A: A credit report is a summary of what debts you owe and a history of how promptly you have paid your bills. The information comes from the companies where you have credit accounts and from public court records. It is collected and stored by companies often called credit bureaus who make the information available when you want to get a credit card or make a major purchase on a payment plan. The three major credit-reporting agencies are:
- Equifax, 1-800-685-1111, www.equifax.com
- Experian, 1-888-397-3742, www.experian.com
- TransUnion, 1-877-322-8228, www.transunion.com
There are exceptions to credit reporting, but generally, no agency may make any consumer report containing any of the following information:
- Cases under Title 11 or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, precede the report by more than 10 years.
- Civil suits, civil judgments, and records of arrest that precede the report by more than 7 years from date of entry, or until the statute of limitations has expired, whichever is longer.
- Paid tax liens that precede the report by more than 7 years.
- Accounts placed for collection or charged to proﬁt and loss that precede the report by more than 7 years.
- Any other adverse information, other than records of convictions of crimes, that precede the report by more than 7 years.
Q: Does a bad credit history ever go away?
A: That depends on the seriousness of past problems. The ﬁles may go back seven years or ten years for bankruptcies. You may obtain a record of your credit history to review from any of the three credit reporting agencies listed on this page.
Q: Can a lender have different rules for making loans to women, men, or minorities?
A: No. The Federal Equal Credit Opportunity Act (ECOA) ensures that everyone has an equal chance to obtain credit. This doesn’t mean that everyone who applies for credit will get it. Factors such as income, expenses, debt, and credit history are considerations. It does mean that a creditor may not discourage you from applying because of your sex, marital status, age, race, national origin, or because you receive public assistance.
Q: What is collateral?
A: Collateral is an item of value that is accepted by the lender to be used to pay back the loan if you are unable to repay it yourself.
Laws may have changed since the last time this article was updated. The current and most up-to-date laws can be accessed here.