Government Debt Could Affect Students in a Big Way

Even the United States government isn’t immune to debt and this is a problem which is all over the news of late. Not only can the government not meet their current debt, but it also looks as if there is a possibility they will go into even greater debt all in the name of stabilizing the economy. Perhaps someone in Washington should have been looking at the government’s annual credit report!

U.S. Economy Cause for Concern in Foreign Markets

Not only are Americans worried about the state of the economy, but foreign nations are also a bit concerned. Those who are especially vigilant in watching what is going on here would be countries such as China to whom we are in debt. The growing concern is that the United States will default on its debt which has a rebound effect throughout the entire world. But what does this say to those of us who are concerned about going to college and the availability of government grants and guaranteed student loans?

Some Grants Already Cut

Although students who will soon be going back for the fall session have already been told what the amount of their Pell Grant will be, there is still concern as to whether or not that money will be available. Summer Pell Grants were already cut which led many students to fall behind in their certification programs while others will need to finish up a degree program after the fall session. More and more students are inundating the financial aid offices of their colleges and universities looking for information on whether or not they will be getting their money which is necessary to continue on in their education.

Uncertainty Grows in the Department of Education

According to  CNN Money, the Department of Education is trying to work as closely as possible with the Treasury Department in order to get particulars on how the present state of the economy will affect students who rely on government aid to pay for their education. It is this growing uncertainty which should be teaching us all a lesson.

The Importance of Good Credit Standing

Consider the worst case scenario. What would happen to your college age children if the government did default on their debt and were unable to offer adequate funding to those students who rely on it to pay for tuition, books and even the cost of living? As parents we may not have adequate credit standing to take out a personal loan or even a secured home loan which is based on our credit score and credit history. As is evidenced by the current crisis in the United States government, defaulting on debts would almost certainly affect future credit.

Taking Steps Now to Avoid Future Problems

Even though there is some amount of optimism in the short term, these problems may not soon go away. Parents are advised to keep an eye on their own credit scores by requesting a free annual credit report from the three reporting agencies. Take care of debt problems now in the event that government funds will not be available in the future to help put your children through college.

By requesting your free credit report from the three reporting agencies, Experian, TransUnion and Equifax, it is possible to begin repairing bad credit before it gets any worse. Whether you have fallen behind on bills, have been the victim of identity theft or simply have erroneous marks on your report which can easily be remedied, you can’t begin to fix what you don’t know is broken! Your child’s academic future may very well depend on your credit score if the government is unable to continue offering current grants and student loans.

 

Is Having Too Much Credit a Bad Thing?

Many people think that having an excessive amount of credit is actually a bad thing in the long run. For some people this may be true. However, for those who are able to manage their money and treat their credit cards as if they are cash then having an abundance of credit may not be the worst thing. The problem seems to be in relying so much on your credit that you wind up in severe debt. Unfortunately, this does happen to many people. The three reporting agencies, Equifax, Experian and TransUnion look at many different factors when assessing your credit score. It isn’t just about the debt you have on your report or how much you owe but also how your payment habits are. For example, do you keep your charging down to under 30%? Do you pay your credit card bills off in such a way that you stay under a specific percentage of debt?

How to Use Credit to Your Advantage

The first thing you need to understand is that having credit in today’s world is extremely important. However, you must also keep in mind that there are right ways to utilize your credit and then there are irresponsible methods of using your credit. A smart spender and someone capable of holding a large amount of credit, will be able to use credit to his/her advantage. What is the best way to do this? This is quite simple. First, you have to assess the amount of credit you have. Let us say you have $40,000 in credit, you spend only $4,000 of that and then pay it off promptly, you have kept your ratio down to 10%. This is very good in the eyes of creditors.

Making Major Credit Mistakes

One thing that many people do the moment they begin to build their credit is start applying for too much credit. Either they are so excited to have this new found credit or they are just overly enthused but one thing is for sure, applying for too much credit too fast looks very bad in the eyes of lenders. Why is this true? It is true for a couple of different reasons. First of all, any time you apply for new credit, your credit is pinged. This means that your score lowers just a bit for each ping. This makes you appear desperate and gives lenders the impression that you are about to take out a massive amount of credit that you will not be able to pay back. Not only can this cause your score to decline but it will also more than likely cause you a few denials.

It is always best to choose credit cards that have incentive programs attached to them. All of the major credit card companies offer cards that have special reward offerings. The best types of credit cards to apply for are the ones that offer the best perks. Many people who have high credit limits and multiple credit cards realise a number of benefits from frequent flier miles to discounts in hotels and restaurants. The more rewards your card comes with the better off you are. Having credit is a big responsibility and you want to be sure that you get the most out of whatever credit lines that are extended to you. Stay away from ridiculously high interest rate credit cards and try to stick to those that offer promotions in terms of lower rates for specific amounts of time. Doing this will help you to keep your credit in tact while saving you a significant amount of money.