Getting Financially Ready

It's never too early to start thinking about paying for your MBA.

Loans are a significant and important part of the financial aid package for most students. If it’s likely that you’ll need financial aid, start lining up your financial resources now.

Before you apply for financial aid, you will need to review and understand your credit profile, a summary of your credit history and your numerical credit score. There are three major credit bureaus that track credit history:

Equifax
Experian
Trans Union

Each of the three bureaus allows you to purchase either a single credit report or a report with information from all three bureaus. You will want to review information from all the bureaus, because lenders may report your credit history to one, two, or all three of those bureaus.

Review each credit report carefully. If any information on the reports seems inconsistent or incorrect, you can file a dispute on the credit bureau’s website.

In addition to checking for mistakes, you should review your reports for lines of credit (such as credit cards) that you no longer use. When you apply for a student loan, the less available credit you have, the more attractive you will look to your lender.

Here are some tips for handling your open lines of credit:

Do

• Close accounts you aren't using (like the credit card you opened up to save 15% on a purchase)
• Maintain sufficient credit in case of emergency

Don't

• Close all your acounts at once
• Open new lines of credit or take out any new loans (The more people look at or "pull' your credit history to give you credit, the lower your score.)

Paying off as much debt as you can. There are two reasons why:

• The less outstanding debt you have, the better you will look to lenders.
• Once you start business school, you will likely live on a tighter budget, and you won't want to have a lot of extra payments every month. Consumer debt can't be deferred.

Pare down expenses wherever you feel you can. You might be surprised at how small changes in your spending habits will help out in the long run. 

Educational financial aid is designed to help with educational expenses only; additional monthly expenses (such as car payments or other debt) will not influence the size of your loan award.

Learn more about applying for financial aid. And for more tips on improving your credit score, visit www.myfico.com.