Thursday, May 29, 2008

Give Credit Where Credit is Due

Now - you're probably thinking I'm going to be giving someone some "props" in this post, but you'd be wrong.

I just wanted to share something I totally think it true, yet not many people - ESPECIALLY teens and younger adults - think much about.

I'm talking about our Credit Scores. Yes - that's right, folks. Your Credit Score will follow you around EVERYWHERE you go. If you made some not-so-bright decisions when you were younger, you'll still be stuck with the "fall out" of those decisions for years to come. Even just ONE teeny weeny late payment... it's there. Like a Bright RED Stain on the White Sheet of your Credit History.

I'm Lucky enough to have a bank that sends me regular credit reports, without it effecting my Credit Score. USAA has a program where you pay $5 a month and you get monthly reports of activity on your Credit - open accounts, closed accounts, inquiries, late payments, etc. And I'm ALSO lucky to be one of those people that never really got into any trouble with Credit Cards or the sort.

But here's mu suggestion:

I submit that we take away one of the practically-useless Algebra class requirements for High School Graduation, and require all students to take a class on Financial Management.

I'm not talking like "If Johnny has $300 in savings, $750 in his checking, and $30,000 in stocks and bonds, what is his Market Value?" I don't mean that kind of math - I mean really good, life altering math education. The stuff that REALLY matters, now matter WHAT job you get, or WHERE you live.

Things like:

- Debt-to-Income ratios

- Interest Rates (to include hidden fees and compound interest rates)

- Reading the fine print on ANY type of financial agreement

- Buy a car you can really afford (not just one you can pay for)

- Saving for retirement

- How to purchase stocks and bonds, and knowing if it's right for you

- Buying vs. Renting your home

- Budgeting 101

- Financial Management

- Financial Planning

Stuff like that. EVERYONE needs to know this stuff. And unfortunately, no one really "teaches" you this stuff until you're on the other side of their desk and they want your business - and then they're just giving you the "basics" or the information that benefits them, or helps them get you to sign on the dotted line.

In this world, there aren't too many people you can trust with your financial well-being. And we are all to quick to give out our Social Security numbers and personal information when it comes to just test-driving a car we like, or WHATEVER the case may be. No one sits you down and tells you that everytime you give someone permission to "check your credit", they are deducting 5 pts from your score. Or that It takes 7 - 15 years for some "black spots" to be removed from your credit history.

Had I not looked at my credit report today, I would NOT have known that they still have a WAY old car loan listed as "Current", even though it was paid off 2 YEARS ago, and has since closed in good standing. OR that there are 2 - 3 "Inquiries" on my Credit History that are about 2 years old, but were supposed to be removed after only 2 years.

So I had to put a dispute against my report, to have the bank update the old Auto Loan information as "Closed. Paid Satisfactorily." And within 10 days, the old inquiries will disappear - ALL of which will raise my Credit score. It may not raise it a lot, BUT when you are planning on buying a Home within the next few months, every little bit can help.

Your Credit History really does follow you around. And where I don't believe you should dwell on it, I do believe you should be responsible with it, and take it seriously.

Does anyone agree with me that this should be a required course in High School?

Because I promise you - if someone had REALLY sat me down and explained all this to me, I would have listened. When someone talks money - almost everyone listens. So why isn't it done more often?

I know they offer "Personal Finance" and other similar classes as electives in High School, but even though I took the class, I didn't get it. They talked more about how to start a business and "create your own business board game" then they did about the REAL LIFE stuff. I took a lot out of the class (even though it was my 1st period class, and I was late almost EVERY day). But I wished I had been taught more.

So... what do you think? Should a Financial Math class of some sort be require din High Schools in place of a 3rd or 4th year of Math that no one ever remembers, MUCH LESS uses in everyday life?

PS - Just so you are all aware (if you're like me and didn't already know), you can check your OWN Credit Report and it does NOT effect your Credit score like it does when someone else checks it and takes away 5 pts. It's considered a "soft inquiry" and doesn't change your Credit Score. So CHECK YOUR CREDIT and Dispute anything that shouldn't be there. :-D



April E. :) said...

I do agree, it shouldn't be a class you CAN I believe you should HAVE to take it. It is a neccessary evil.