A Financial Story
Angie, Class of 1998
I went a little crazy with credit cards when I was a student. It was so easy to get a credit card. I had 3 or 4 major cards and a whole slew of store cards. I racked up about $4000.00 by the time I graduated. It took me five years to pay off that debt and I no longer have a credit card.
subscribe to feedFrequently Asked Questions
Loans
What is accrued interest?
Interest that accumulates on the unpaid balance of your outstanding loan principal.
What is Capitalization of Interest?
Unpaid accrued interest is added to the principal of your loan.
What is default?
Failure to repay your loan in a timely manner, or in accordance of the terms of your Promissory Note.
What is deferment?
A period of time when a borrower may suspend loan payments under specific conditions. Extensions granted for special circumstances.
What is a grace period?
A specified period of time (for student loans generally six months after you graduate, drop below 6 units or leave college). You are not required to make payments during your approved grace period.
What is a lender?
The bank, credit union or other financial institution that provides funding for your loan.
What is a Master Promissory Note?
A Master Promissory Note (MPN) is a legally binding contract you sign, agreeing to repay the loan money you borrowed.
What does loan consolidation mean?
Loan consolidation means combining outstanding loans into a single loan with one monthly payment. You will have more time to payoff debt, but in all likelihood, the total cost will be higher.
What does it mean to be in forbearance?
Temporarily stop loan payments because of financial hardship.
What is graduated repayment?
Monthly payments gradually increase, usually every two years – hopefully along with your income.
Credit Cards and Credit Reports
What is a Credit Bureau?
An organization that tracks repayment of credit obligations, data stored on your credit report and is available to other financial institutions and ranked as to your credit worthiness or credit risk.
Website address to request free credit bureau report?
How often can I request a free credit bureau report?
Annually.
What range constitutes an acceptable credit score for a student loan?
650 to the max of 850
What is Equal Credit Opportunity Act?
Law prohibits credit denial based on your sex, race, age, religion, marital status, national origin or receipt of public assistance. You are entitled to an explanation of any credit denial.
What kinds of personal information is on your credit report?
Name, telephone number, address, social security number, date of birth, and current employer.
What your credit report does not include?
Your level of education, medical history, purchases paid by cash or check, gender, national origin, race or religion, your investments, income, alimony commitments.
Who sees your credit report?
Court Ordered - YOU – credit transactions, credit review of existing customer, debt collection - employment screening -insurance underwriting – government license screening - state or local child support enforcement authorities.
What influences your credit scores?
payment history (35%) -level of indebtedness (30%) -age of credit history (15%) –credit inquiries (10%) -types of accounts (10%)
What is a credit inquiry?
Any time your credit report is requested (usually over 24 month period).
How do I report a lost or stolen card?
Call the customer service number on your billing statement, search online or call directory assistance (411) to ask for the toll-free number of the banking institution (ex. Capital One, Citibank, etc…).
Why should I have a credit card?
Build credit, increase your borrowing power, and make major purchases.
What is an annual fee?
Charge sometimes required by credit card companies for use of an account, fees usually range between $35-$50. With a rewards card, you should ensure that the benefits of the mileage or points program outweigh the cost of the annual fee.
What is a grace period?
This is the period of time (usually 20-29 days) when you can pay your credit card bill without being charged interest. If none, interest is charged as soon as you make a purchase.
What is an introductory rate?
Most credit card offers include an introductory rate for the first few months. A 0% offer can be a great deal BUT - How long does the introductory rate last? Does it apply to new purchases and balance transfers? Creditors can usually cancel the introductory rate early if you make a late payment.
What is a penalty rate?
75% of credit card providers include a penalty rate clause with their credit card offers. Rates can increase dramatically if payments late (avg. 23% vs normal rate 6-12%). After six months of timely payments, most creditors will consider lowering your APR again.
What is FICO?
FICO is a mathematical model created by the Experian to evaluate lending risk. FICO stands for Fair Isaac Company.
How can you build a good credit history?
Pay bills in full each month. Establish different forms of credit—checking account, debit card and car payments—demonstrate responsibility.
What is average daily balance method?
Outstanding balance less payments plus credits for each day in the billing cycle, divided by days in the billing cycle. Some credit card issuers include new transactions in this calculation, while others exclude new transactions.
What is bankruptcy?
Legally declared unable to pay your debts as they become due. Remains on a person's credit report for at least 10 years and, in some cases, indefinitely. “Last Resort”
What is a billing cycle?
The length of time between billing statements. Between 27 and 33 days.
What is CCCS?
Nonprofit helping people get out of debt. CCCS counselors can advise you on how to develop a budget you can live with and can be invaluable in helping you negotiate repayment plans with your creditors. This service is confidential. To reach the CCCS, call 1-800-388-2227.
What is a credit line?
The maximum you can charge on your credit card account. When you receive a new credit card, you're usually issued a set credit line. Under some circumstances, your card issuer may increase or decrease it.
What is LIBOR?
(London Interbank Offered Rates)Five major London banks determine these fixed rates daily for specific maturities. What does this mean to you? LIBOR may be used by some banks instead of the Prime Rate to set APRs.
What is the Prime Rate?
Prime means "best," and this rate is what banks charge their best commercial customers for loans. The prime changes often, is reported daily in The Wall Street Journal, and is used as a reference point for many businesses. For instance, the prime rate is used by some financial institutions to set the APR for credit cards.
What is a transaction fee?
Fees charged when you make certain types of transactions. Transaction fees are typically assessed on cash advances and cash-like transactions, such as money orders, wire transfers, and casino gaming chips.
Financial Aid
What do you use to electronically sign your FAFSA and what is the website address to obtain one?
FAFSA pin www.pin.ed.gov
What does the acronym FAFSA stand for?
Free Application for Federal Student Aid
What is the website address to complete the FAFSA?
What is the maximum Federal Stafford Loan eligibility for an Undergraduate Program?
$23,000
Where can I get advice on taking out a loan?
Can federal and alternative student loans be consolidated together?
Yes, but not recommended.
How do you apply for financial aid?
Complete FAFSA online at www.fafsa.ed.gov and complete any forms necessary for institution applying for.
What is PSU’s priority filing deadline?
March 1st
How will my school be notified I have been approved for a loan?
Schools are notified electronically from the lender that you have been approved.
How long does it take for the school to be notified of an approved loan?
The time it takes for a school to be notified depends on how long it takes the student to complete the application and sign the promissory note. It could be a week to two weeks once everything is in place.
Identity Theft
What is identity theft?
When someone steals your name and other personal information for fraudulent purposes
What kinds of info are identity thieves looking for?
Social security numbers, dates of birth, bank account numbers, credit card offers, wallets.
Where do Identity thieves get their information?
Trash, looking over someone's shoulder, stealing, computers/hacking.
What do you do if your identity is stolen?
- Report it to police
- report to all account providers (bank, credit)
- report to credit reporting agencies, and get a copy of credit report