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Barbara

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Post car breakdown, my father suggested I start thinking about purchasing a new vehicle when summer rolls around.

A car loan can be a large undertaking. Before I got too committed to the idea of a new vehicle, I decided to first research my credit score and credit report. Both affect the rate I would get on a car loan.

There are a number of ways to see how you're using your credit. I chose to take advantage of a free trial of FICO® Score Watch® —a program that allows you to check your credit score and credit report through Equifax, one of the nationwide consumer credit reporting agencies.

The program lets you know what’s helping your score and what’s hurting it. I found out that my history of no late payments is an advantage, while my short credit history is one of my pitfalls.

You can also check your various credit accounts, any inquiries by lenders or business looking into your credit, reports from collection agencies, and any public records you may have like tax liens, bankruptcies, foreclosures, and garnishments.

For me, the coolest part of the program was the Score Simulator. This tool allows you to see how different scenarios would affect your credit score. It also gives you a best course of action—the plan of attack that will help your credit score the most.

So I simulated applying for an auto loan. Applying for this new credit in my current situation could lower my credit score by 30 points. It really got me thinking about what I could do to improve my current credit score before applying for new credit.

Just for fun (well, it wouldn’t be fun if it actually happened), I simulated my score if I maxed out all my revolving credit accounts—those include credit cards, store cards, and lines of credit. With that, my score dropped about 100 points! Yikes!

Better just follow my best course of action and pay off my credit cards over the next 24 months.

If you’re curious about your credit score, what you could do to improve it or what future actions could hurt it, Score Watch might be something to check out.

Do you check your credit/scores on a regular basis?

Caroline

If you're about to graduate from college, congratulations! And, if you've taken out student loans , guess what?

You have a new best friend.

If you took out federal loans , you may have already been through an "exit counseling"  session. That's where they tell you all about your rights (blah, blah, blah) and responsibilities (blah, blah, blah) as a student loan borrower.

With the excitement of graduation looming, you may have only heard "blah, blah, blah" during this session. But your responsibilities as a borrower are important. So let me boil them down to one easy-to-remember rule: Treat your student loan lender like your new best friend.

Got it?

Now let me break it down a little further …

• When you make a life change, you tell your friends. Well, since your lender is your new best friend, remember to tell them when you change your name, when you move to a new address, change your Social Security number, or if your school status changes.
  
  
• If you're in trouble, you tell a friend, right? If you're having problems making your student loan payments, tell your lender—don't hide from them. Your lender can help you work out a payment plan and avoid default .
  
  
• You wouldn't borrow money from a friend and try to get out of repaying it. You can't do it to your student loan lender either. You HAVE TO repay your loan as agreed. No exceptions if you didn't finish school, didn't like your major, can't find a job, yada, yada, yada.
  
  
• If your friends can't get  hold of you for a few days, you don't ditch them. Same with your lender—if you don't get your bill, YOU STILL HAVE TO PAY IT. There's no "get a free month" if your bill doesn't arrive for whatever reason.
  
  
• You go to your friends' parties. Consider entrance and exit counseling sessions less-than-exciting parties given by a great friend. You gotta go.
  
  
• You read texts, emails and IMs from your friends. You new friend will probably get in touch with you in a more traditional way—like through the mail . But you're required to open and read everything your lender sends you. So, hello mailbox!
  
  
• For better or worse, relationships change. Learn about your consolidation and refinancing options—these could be good things for you. But you also have to know what will happen if things go south in your relationship with your lender—as in, if you default. (Don't do it, it's so not good.)



• Know how to reach your friends. This is Friendship 101—you KNOW their phone numbers, addresses, etc.  Same with your lender—be sure you know where to send payments and written correspondence.