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Students should learn about credit scores




GOVERNOR’S CUP — Letcher County Central High School academic team students participated in the Governor’s Cup last week in Louisville. The academic team had placed third overall in the regional Governor’s Cup Feb. 14, with the LCCHS varsity quick recall team finishing in first. Pictured are (back row, left to right) Marcus Baker, Noah Blair, Keisten Collins, Stamper Collins, Cory Sparkman, (front row) Katie Braswell, Brooke Saurer, Rebecca Stanifer, Cameron Wright, Trevor Quillen, (seated) Coaches Barbara Hampton and Regina Donour.

GOVERNOR’S CUP — Letcher County Central High School academic team students participated in the Governor’s Cup last week in Louisville. The academic team had placed third overall in the regional Governor’s Cup Feb. 14, with the LCCHS varsity quick recall team finishing in first. Pictured are (back row, left to right) Marcus Baker, Noah Blair, Keisten Collins, Stamper Collins, Cory Sparkman, (front row) Katie Braswell, Brooke Saurer, Rebecca Stanifer, Cameron Wright, Trevor Quillen, (seated) Coaches Barbara Hampton and Regina Donour.

Students should be familiar with credit scores, according to the Kentucky Higher Education Assistance Authority (KHEAA).

Your credit score is a three-digit number that has a long-lasting effect on your buying power. When you apply for credit, your credit score will be checked. The higher your credit score, the better the chances you will be approved.

Although there are several scoring methods, the most widely accepted form comes from the Fair Isaac Corporation, or FICO. Your FICO score ranges from 300 to 850. The exact formula that Fair Isaac uses is proprietary information, but these items make up your credit score:

• 35 percent of your score is based on your payment history. Early payments will have a higher number than on-time payments, which will have a higher score than late payments.

• 30 percent of the score is based on outstanding debt. This outstanding debt is how much you owe on car loans, mortgages, credit cards, etc. The number of credit cards you have and if those cards are near the maximum borrowing limit will hurt your score.

• 15 percent of the score is based on the length of time you have had credit. The longer you have been borrowing money and paying it back in a timely manner, the better your score.

• 10 percent of the score is based on new credit. If you have opened several new accounts, that will have a negative effect on your score. Also, the more inquiries on your credit report in a year, the lower your score.

• 10 percent of the score is based on the types of credit you currently have. It helps to have a mix of loan types. If you have a credit card, an installment loan will even the credit out.

KHEAA is the state agency that administers Kentucky’s grant and scholarship programs, including the Kentucky Educational Excellence Scholarship (KEES). It provides financial literacy videos at itsmoney. kheaa.com. KHEAA also provides free copies of “It’s Money, Baby,” a guide to financial literacy, to Kentucky schools and residents upon request at publications@kheaa.com.

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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