The President's Advisory Council on Financial Literacy defines personal financial literacy as "the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being." (2008 Annual Report to the President). Personal financial literacy is more than just being able to balance a checkbook, compare prices or get a job. It also includes skills like long-term vision and planning for the future, and the discipline to use those skills every day.
The "B" Word
Budgeting may seem like a bad word, but we promise you — it is harmless! Many people view a budget as being restrictive, but it is merely a plan for how you will spend (and save) your money.
Creating a budget may seem overwhelming, but it is worth it in the long run. Planning your budget will take time and effort, but it will reduce stress about your bills and make you feel better about where your money is going. Some things you need to remember about budgeting:
1. Build your budget on what you actually bring home, not on what you make before taxes.
2. Factor in all of your expenses, even the little ones like that vanilla latte every morning.
3. Prioritize to see where you can make cuts.
4. Keep track of your expenses to make sure you are actually sticking to your budget.
Where Can I Get Help?
Register with GradReady to gain access to online financial literacy tools and to get more information about setting up a budget that works for your situation. Registration is free.
Rresponsible Loan Borrowing
Student loans are made available to you by virtue of your student status. That doesn't mean that you need all of what has been offered to you. Please remember that student loans are required to be repaid with interest after you leave school or drop below half-time enrollment.
What is FICO?
The acronym FICO stands for the Fair Isaac Corporation. FICO is the largest and best known of several companies that provide software to calculate a person's credit score. Your credit score gives lenders an idea of how risky it would be to lend money, or rent or sell property to you.
Why is it important?
Just because you want to purchase something doesn't mean that people are eager to lend you money for that purpose. Lenders (and landlords) look at your credit score to determine whether or not you are creditworthy. We depend on credit for so many important things in life — whether it is for buying a car, house or computer or getting a student loan (private lenders check your credit). A three-digit number — your credit score — can determine whether you can do these things and even how much it will cost you.
What's in my FICO Score?
The FICO® Score is calculated from several different pieces of data in your credit report. This data is grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining how your FICO Score is calculated.
Your FICO Score considers both positive and negative information in your credit report. Late payments will lower your FICO Score, but establishing or re-establishing a good track record of making payments on time will raise your score.
How a FICO Score Breaks Down
If you don't have any credit yet, it may take about six months to establish your credit history and get a FICO score once you open your first credit account. As time passes and you continue to use your credit responsibly, you will see your FICO score rise. As your FICO score gets into higher ranges, more credit may become available to you and at better terms. When utilizing your access to credit, keep this in mind: only apply for credit that you need and always pay your bills on time.