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This case is available in MyFinanceLab.
Maria will be a college sophomore next year and she is determined to have her own credit card. She will not be employed during the school year but is convinced that she can pay for credit card expenses based on her summer earnings. Maria’s parents have read a number of articles about the problems of credit cards and college students, including examples of students leaving school after a downward spiral of credit cards, overspending, working to pay bills, worrying about bills, working more hours to pay bills, and eventually withdrawing from school. When Maria showed up with a handful of applications including Visa, a Gold MasterCard, Discover, a Visa sponsored by her university, an American Express, a secured MasterCard, and a gas company card her parents were overwhelmed. Maria admitted she didn’t want them all. “I’m not stupid,” she declared. Since Maria obviously needed to learn about credit cards, her parents agreed to cosign her application on one condition. She had to approach her choice just as she would a class project and research the following questions.
How might Maria’s credit card use impact her future job search? What should she do to avoid any problems?
Employers have a right to review one’s credit report, with permission. Many employers use credit history to screen applicants. M might be negatively impacted if she holds huge revolving balances, has incurred late fees, or has other negative information in her credit report. These credit behaviors are negative indicators of employee performance.
M can avoid the negative circumstances of bad credit history by avoiding credit abuse problems. To protect her report from wrong information, or information that does not belong to her, she should take the privilege of the free credit reports offered by the three major credit bureaus: Experian, Equifax, and TransUnion.