How report cards grow up to become credit reports

SALT LAKE CITY — I was holding a big smiley face sign in my left hand, and a frowny face in my right. I was confident these flashy visual aides would stimulate teenage brains into fully grasping the perks and pitfalls of using a credit card.

But, almost a year later, here I am looking at a newspaper clip from that visit to a local high school on last year's "National Get Smart About Credit Day." All I notice in the photo is a wild mane on the head of a sophomore student on the front row —literally within my reach— whose face is hidden by hair while he sleeps on his desk during my home room visit at 9:27 a.m.

This year, I've got to get my message through to more students.

October is the time when thousands of bankers around the country visit high school classrooms to teach students about the importance of credit and to walk them through credit reports.

National Get Smart About Credit Day is targeted to high school students before most of them obtain credit cards. According to the American Bankers Association, 83 percent of college students have at least one credit card and a Sallie Mae survey reported the average balance among college undergraduates has grown to $3,173.

By visiting a local high school, I'm hoping to provide a roadmap for students to embark on the journey to good credit. Building strong credit takes time, and teens need to begin healthy financial habits early — before they graduate and go to college. Zions Bank wants young people to understand that the financial decisions they make now can impact their ability to get loans, or even a job, in the future.

Thankfully, the state of Utah mandated a General Financial Literacy semester course requirement beginning with the graduating class of 2008. It's common for me and other bankers to visit these classrooms. And let me tell you: these teachers are doing a fabulous job helping our future citizens build important financial foundations.

But how is a guy in a suit and a briefcase to reach out to students?

This year, I'm putting down the smiley face posters. I'm going to roll up my sleeves, run the copy machine, and print out a bunch of sample credit reports. The fidgety teenagers will join me on a walk through an entire credit report, section by section.

We'll point out the portion where late bill payments are reported. We'll discuss how having too many open lines of credit can negatively impact your credit score. They'll squirm in their chairs. The nitty gritty might be scarier than the students' favorite haunted house. But don't worry. It gets better! We'll talk about how good credit can really work to your advantage. I'll tell them about how saving and investing rather than paying down debt can have huge benefits.

Everyone can get smart about credit by taking these steps:

• Pay your bills on time.
• Check your credit once a year at www.annualcreditreport.com. It's the best way to detect ID theft and spot potential errors.
• Strive to keep your balances on credit cards to 75% or less of your available credit, but 25% is even better.
• More credit inquiries can lower your score. Don't let anyone make an inquiry on your credit report unless you absolutely have to.
• There was a time that people would close open lines of credit to clean up their credit report, but today lending institutions look at a borrower's debt-to-credit ratio, so it is not always advantageous to close accounts.

As you review your credit or even work on straightening it a bit, consider involving your teenage children so you can help the understand a real-world example of the impact of credit.

Together, you can also discuss the best time for teens to start building credit, perhaps with a low-balance credit card. To help change the "buy now, pay later," culture, we can all work to help younger generations get smart about credit.

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