#Adulting 2.0: Credit score x credit history
By: Mariah McGhee
Tribal affiliation: Yankton Sioux
Major: Business Entrepreneurship
The summer before I started college at Arizona State, I met with a banker and we decided it would be a good idea for me to open a credit card for college students. The banker said that if I only put essential purchases on the credit card and never missed a payment, I’d have a good credit score by the time I graduated college. He also said the credit card would give cash back for making payments on time each month. Four years later, I am now in my senior year, I have an awesome credit score for a 21 year old, and every so often the cash-back feature will deposit into my checking account. I’ve never missed a monthly payment and I even pay off the remaining balance when I can.
Although I’ve taken the right steps toward maintaining a great credit score, one thing I had to learn on my own was understanding credit history. When I was trying to purchase a car in my name, I ran into a problem the banker didn’t mention — I didn’t have credit history. He only stated how appealing my score would be. I learned that credit score and credit history go hand-in-hand as we #adult in life. Credit history shows your financial history, that you can pay off big purchases and are reliable whereas credit score determines your creditworthiness. Since I didn’t have credit history, my mom had to co-sign on my car and I will refinance it when the balance goes down. This is the start of my credit history.
When you think about it, your credit score is really the only thing talked about in regard to credit cards. Use my experience as an example of how both credit scores and credit history factor into life decisions. There are also benefits to keeping both of them healthy. Depending on your credit score, you could pay less for certain things such as a security deposit for an apartment. Not only would you need a good credit score to lease a car, but it’ll also get you insurance discounts.
As I prepare to graduate in 2021, I share my financial health experiences with Native college students because credit cards are not a hot topic on reservations. The reality is, not everyone has access to information that happens only through experience. Throughout my college career I have managed two part-time jobs and school full time. I have been good at saving money and am grateful I was taught the value of a dollar at a young age. When you understand the value of a dollar and know how hard it is to make money, your perception on spending changes.