Credit Tips for Borrowers
The Fair Credit Reporting Act lists a consumer report as "any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family, or household purposes; employment purposes; or any other purpose authorized under section 604 [§ 1681b]." (From § 603. Definitions; rules of construction [15 U.S.C. § 1681a])
Why Credit Matters More Than Ever
With upcoming federal changes—the elimination of the Grad PLUS loan and the introduction of new lifetime federal loan limits ($200,000)—your credit health has never been more important.
Strong credit can open the door to better interest rates and more flexible repayment terms on private and institutional loans. A higher score means lower borrowing costs, more lender options, and greater financial confidence as you plan how to fund your education and future.
Building and maintaining solid credit takes time, consistency, and awareness of the factors that influence your score. Use the strategies below to strengthen your credit profile before applying for loans.
Managing your credit history
- Borrow Responsibly.
Only take on debt you can manage. Avoid opening unnecessary credit accounts or relying heavily on credit cards. Establish a monthly budget—and stick to it—to prevent unmanageable balances. Ideally, maintain no more than two credit cards and keep balances under one-third of your available credit limit. - Understand Your Terms.
Before accepting any loan or credit offer, carefully review the interest rates, fees, and repayment terms. Watch for details such as variable rates, late payment penalties, or annual fees that can increase your total cost. - Track Your Debts.
Keep a running list of your credit obligations—including the creditor name, balance, minimum payment, and due dates. Staying organized helps prevent missed or late payments that can damage your score. - Keep Documentation.
Maintain clear records of all financial agreements—applications, statements, and correspondence. These can help you dispute errors and protect your credit history. - Review Your Credit Reports Annually.
You can access a free report from each of the three major bureaus—Equifax, Experian, and TransUnion—every year at AnnualCreditReport.com. Check for errors, unauthorized accounts, or signs of identity theft. Early detection is key to protecting your score. - Limit Credit Inquiries.
Too many credit checks in a short time can lower your score. Limit new credit applications to what’s necessary, and avoid multiple inquiries when possible. - Pay On Time—Every Time.
Your payment history is the single largest factor in your credit score. Set up automatic payments or reminders to ensure bills are paid before the due date. - Take Ownership of Your Debt.
Your creditors didn’t create your debt—you did. Repaying what you borrow shows lenders that you’re dependable and financially disciplined, which strengthens future borrowing potential. - Seek Guidance Early.
If you’re struggling to make payments, contact your lenders or a certified credit counselor before missing due dates. Proactive communication can often prevent damage to your credit score. - Keep Learning.
Credit laws and scoring models evolve. Staying informed about your rights under the Fair Credit Reporting Act (FCRA) and understanding how your financial behavior affects your score will help you make smarter borrowing decisions.
Your Credit and Future Borrowing
As federal funding options tighten, your credit score will directly influence:
- Which private and institutional lenders you qualify for
- The interest rate you receive
- The overall cost of your education
Even small improvements in your credit score can translate into thousands of dollars in savings over the life of your loans. Start early, stay consistent, and treat your credit like one of your most valuable professional assets.
Understanding Credit Score Ranges & Typical Loan Rates
| Credit Score Range | Rating | Average Private Loan Rate (Variable) |
|---|---|---|
| 760 – 850 | Excellent | 6.5 - 7.0% |
| 700 – 759 | Good | 7.0 - 8.5% |
| 660 – 699 | Fair | 8.5 - 10.0% |
| 620 – 659 | Below Average | 10.0 - 12.5% |
| Below 620 | Poor | 12.5% + or may not qualify |
Note: Rates vary by lender and market conditions. Institutional loan rates at MWU are designed to remain competitive and student-friendly - but higher credit scores still receive the best terms.
Need Personalized Help?
Take advantage of Sensible Strategies 1-on-1 Financial Wellness Sessions to:
- Review your credit report with a financial expert
- Build a step-by-step Credit Action Plan
- Learn how your score affects loan eligibility and interest rates
- Identify the best next steps for improving your credit before borrowing
Contact: sensible_strategies@midwestern.edu