The Importance of a Good Credit Score for Pre-Health Students
Written by: Sarah St.Germain, Pre-Health Peer Advisor
What is a credit score?
A credit score is sort of like a report card for your financial responsibility. It is a number that shows how good you are at managing money and paying back what you owe. Certain things like paying bills on time, how much you owe, and how long you have held credit accounts all affect your score. Having a high score means you are seen as reliable and trustworthy when it comes to borrowing money or using credit cards. Having a high credit score also gives you a better chance of being approved for loans.
Why is a credit score important?
Your credit score is more than just a number, it's a measure of your ability to manage debt responsibly. Certain federal agencies do not look at your credit score for eligibility for loans, but private lenders do. If you one day plan on taking advantage of private student loans, which can include lower interest rates and flexibility of payment schedules, you will need to maintain good credit. Some employers will also check your credit score in the future.
How do you build your credit score?
- Know your current credit score
- You can check this once a week for no cost at https://www.annualcreditreport.com/index.action. Checking your credit score can give you feedback on what factors are contributing to it. You can use this feedback to improve your score.
- Maintain long-term credit accounts
- Having credit accounts that are open for a long time can benefit your credit score. Even if you do not use your old credit accounts very frequently it is beneficial to keep them open and try to use them a few times a year.
- Prioritize saving money
- Having some savings will allow you to be prepared for unforeseen financial situations in the future. Things happen sometimes, but by making sure you have savings, it ensures that you will still be able to continue loan repayments and credit card payments. This will help make sure that your credit score is maintained during this situation
- Think long term
- Every credit event eventually drops off your credit history; even bankruptcy. I know sometimes it is hard to think long term, but nothing is forever, and you always have the potential to improve your score over time. The best time to start is now!
Additional Resources
- Money Management Resources; Association of American Medical Colleges
- Low Credit Scores Can Cost You; Indiana University School of Medicine
- Why is Your Credit Score So Important?; Chase Bank