Kentucky Higher Education Assistance Authority
May Money Tip for Students

Students should be smart when it comes to managing their credit, according to the Kentucky Higher Education Assistance Authority (KHEAA).

Once you start paying bills, you start building a credit score. If you have a history of paying bills late, it will be reported to credit rating agencies and affect the interest rate you pay on credit cards and loans. It may also affect how much you pay for insurance and whether you are approved for renting an apartment.

A credit score is based on your payment history. Credit scores are used by lenders to help determine if applicants qualify for a credit card, loan, insurance or other services. Most credit scores estimate the risk a company incurs by lending money or providing a person with a service — specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher your credit score, the less risk you represent.

Some people think you need a credit card to build a credit score. But if you open your utility accounts in your name instead of your parent’s name, you can work toward building a credit score in six months.

A late or missed payment stays on your credit report for seven years, even if the creditor has been paid in full. It is better to start off on the right foot by establishing checking and savings accounts, using your credit cards sparingly and paying all of your bills on time.

KHEAA is the state agency that administers Kentucky’s grant and scholarship programs, including the Kentucky Educational Excellence Scholarship (KEES).

To learn how to plan and prepare for higher education, go to www.gotocollege.ky.gov. For more information about Kentucky scholarships and grants, visit www.kheaa.com; write KHEAA, P.O. Box 798, Frankfort, KY 40602; or call (800) 928-8926, ext. 6-7372.

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