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Phil Stops By to Talk About Credit

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Episode 3: Phil Stops By to Talk About Credit

Director of Financial Literacy at Indiana University, Phil Schuman, stops by to talk about the increase in the number of students who are obsessed with building their credit and why that's the wrong area to place their focus.  Pete, Alex, and Phil also talk about the resources students have access to at their University where they can get help.

If you were to ask us what 3-digit number with which most students seem to be concerned, we’d have a time picking between their GPA – which we hope is 3 digits - and their credit score.  This, to us, is a very interesting situation. 

The emphasis that is placed a person’s credit score is mostly advertising-driven.  We are not going to argue that a better credit score will get you better interest rates and could save you money down the road because it’s absolutely true.  What we will argue is the feeling of needing to do everything you can to improve your score, especially when those that are telling you to do this are companies who want you to borrow money so they can make money and agencies who advertise they can help you achieve a better score.

The bottom line: STOP CARING ABOUT YOUR SCORE (sorry for the yelling).   Worry about the things that make up your score.  It’s no different than how you navigate your academics; if you do your assignments, turn them in on time, pay attention, etc., your final grade will take care of itself.  Your final grade isn’t some randomly generated number that your professor assigns at the end of the semester – although we’re sure it feels like it – it’s an indication of the effort you put in day in, day out to accomplish the goal of understanding the material presented.  In the credit world, if you pay your bills on time, pay attention to your levels of debt, don’t overborrow – both the amount and/or the number of debts you have – and not make unnecessary financial decisions, you will be fine.

The goal with credit – as strange as this may seem – is to not need it.  We understand that this is not necessarily a feasible goal; if you want to buy a house one day you may not have the money saved up to pay fully in cash.  However, your goal should be to borrow as little as possible so that you don’t have to rely on somebody else for money.  

If you have more questions about credit, please contact us.  Set up an appointment with the IU MoneySmarts Team and they’ll be happy to help.  In the meantime, focus on those grades of yours.