Bill would set boundaries for credit issuers

03/10/08 by Karen Karaszkiewicz Times Staff Writer      Marketing programs that offer gift cards, T-shirts and other freebies as incentives to open credit card accounts could be banned on college campuses if a bill sponsored by a Carroll County lawmaker passes.      Del. Susan Krebs, R-District 9, has introduced legislation that would prohibit credit card issuers from giving away free promotional items in exchange for completed credit card applications while soliciting on campuses or during collegiate sporting events.      The House Economic Matters Committee has scheduled a hearing on the bill at 1 p.m. Thursday.      According to Krebs, the bill is intended to protect students from unknowingly damaging their credit. “One of the things that goes into your credit score is [the number of] credit cards you’ve opened,” she said. She noted that even some college educators are unaware of the risks involved in having too many applications for new credit, which are tracked as inquiries on credit reports.      Susan Milstein, professor of accounting at McDaniel College in Westminster, said having more than three accounts open at one time can negatively affect scores even if the cards are never used, because lenders view them as potential debt. She also said parents should be able to monitor their children’s credit cards, and she would support a law prohibiting the use of gifts to entice college students to apply.      Referring to credit card companies, Milstein said, “I’m glad they’re not here.” McDaniel already prohibits them from soliciting students on campus, regardless of whether they offer gifts as incentives, according to Amanda Rose, assistant director of college activities.      Credit card solicitors handing out water bottles, Frisbees and logo T-shirts are common at the University of Maryland, College Park, campus, said student Christina Markuski, an intern at Krebs’ office.      “It’s constantly in our faces every day,” Markuski said, adding that she has never applied for a credit card on campus. As part of her internship, she helped do research for the bill.      Some companies recruit campus organizations to market credit cards to their fellow students as a way to raise money for their organizations, she said. The groups receive a fee — sometimes as much as $5 — for each properly filled-out application, as well as freebies to hand out to those who apply, Markuski said.      According to Krebs, applying for multiple credit cards can harm students when they later apply for mortgages, because people with low credit scores are not eligible for prime loan rates.      A large number of inquiries can also make a big impact on the credit reports of young adults, because at that age, they have few other factors to stabilize their credit. “Kids are getting out of college and they have low credit scores for reasons they don’t even know,” Krebs said. How credit scores are affected Following are the top 10 factors for credit scoring, in order of importance: 1. Major derogatory items on your report, such as bankruptcy, collections, foreclosure and slow pays 2. Time at your present job 3. Occupation 4. Time at your present address 5. Ratio of balances to available credit lines 6. Homeownership 7. Number of recent inquiries 8. Age 9. Number of credit lines on your report 10. Years you have had credit in the credit bureau database Source: www.creditinfocenter.com