Financial Wellness @ Penn aims to enhance students’ financial well-being by providing personal finance education, tools, and resources. Financial literacy is the first step in the process – understanding personal finance skills and why they’re important. We want to take student financial literacy a step further toward financial wellness: our goal is to help students feel empowered to set financial goals, make informed financial decisions, and improve their financial behaviors. We believe every student—undergraduate or graduate—should leave Penn with a plan for their financial future.

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Meet Penny!

Penny is the piggy-bank mascot of Financial Wellness @ Penn. You'll see her often around campus and on social media. When you see her, that means you're going to learn something about money. You can keep track of what Penny is up to on social media (@finwellatpenn on both Instagram and TikTok). Penny sometimes does silly things unrelated to money... If you see us on Locust Walk, make sure you stop by!

Start your financial wellness journey today by learning about credit!

Credit is a representation of your trustworthiness as a borrower. There are many scenarios in which you might need to borrow, including taking out student loans to pay for your education and making big purchases such as a house or car. Your creditworthiness data is gathered by three credit-reporting agencies, also called credit bureaus, called Equifax, Experian, and TransUnion.

Your credit is represented in two forms: a credit score and a credit report.

Credit Score: a numerical snapshot of your creditworthiness, ranging between 300 and 850.

Factors that determine your credit score:

Payment history: making on-time payments

- Ex.: If your credit card payment is due the 20th of each month, be sure to pay at least the minimum by then.

Credit utilization: how much of your credit limit you are using

- The recommended amount is below 30%

- Ex.: If your credit limit is $1000 and you have a balance of $200, your credit utilization is 20%.

Credit age: the average age of your open credit accounts

- The longer you are able to maintain a healthy credit account, the better

- Ex.: If you’ve had a credit card for five years and you take out a new loan, your average credit age would be (5+0)/2 = 2.5 years

Credit mix: the types of credit you have

- Installment debt (loans) vs. Revolving debt (credit cards)

- Ex.: Do you only have credit cards? Do you only have loans? Do you have a mix of both? Don’t feel like you have to have both to have good credit. This is a minor factor.

Hard inquiries: Applying for new credit may result in a temporary dip in your score

- Ex.: When you apply for a new credit card, that credit card company may do a hard inquiry on your credit to ensure that you are a trustworthy person to give a new line of credit to

Credit Report: an in-depth overview of your history as a borrower that lenders use to determine how likely you are to pay them back.

Credit reports include detailed credit activity, account statuses, personal information, credit inquiries, collection items*, and public records**

- *Collection items are overdue payments that are sent to debt collecting companies by the businesses you owe

- - Ex.: A student fails to make payments on an auto loan they have taken out; the lender might turn to a debt collector to collect that student’s debt.

- - Collections typically involve reporting late payments to credit bureaus, which impact the borrower's credit score negatively

- **Public records include foreclosures, bankruptcies, civil suits, and liens

Consumers may pull one free credit report from each credit bureau annually from annualcreditreport.com. We encourage you to take advantage of this by pulling one report every 4 months to ensure all your information is accurate.

- It’s crucial to make sure no one is opening new credit accounts or using your existing credit accounts under your identity without your knowledge.

- If you see an error in your credit report, dispute it.

What is a Credit Card & How to Manage It

A credit card is a form of revolving debt that functions via a billing cycle.

The billing cycle works as follows:

A billing cycle lasts ~1 month and ends with a statement date. During this time, you can spend within your granted credit limit.

Your statement balance will be the sum of all charges within your billing cycle.

- Remember: try to keep your credit utilization below 30% to maintain good credit and to ensure your payments are manageable.

Normally, you have a ~25-day grace period to pay off the statement balance

- To maintain good credit, always pay at least the minimum payment by the due date.

- To reduce interest accrual, pay more than the minimum. If you always pay the full balance every month, you can always avoid interest accrual.

The next billing cycle starts as soon as the first one ends, so note that your next billing cycle will overlap with the grace period from the prior cycle.

Key Notes & Tips:

Stay aware of important dates like the beginning of a billing cycle, your statement date, and your payment due date. One strategy is to set monthly calendar reminders for each of those dates.

Only spend what you can afford to pay back! Doing a budgeting exercise (see here for Financial Wellness @ Penn budgeting template) before opening credit is a great way to get a better understanding of how much you can afford to spend.

Credit cards are not free money! Anything you spend you will have to pay back over time. Additionally, credit cards typically have high interest rates, so balances can grow quickly when you let interest accrue.

Try not to obsess over your credit score, but rather focus on building responsible debt management habits.

Ready to improve your financial wellness? Consider scheduling a peer counseling appointment, attending or co-hosting a workshop, or browsing our online education modules. For other inquiries, contact financialwellness@upenn.edu.