Credit and Credit Cards

Your credit score should be looked at as your money management skills “grade” and your credit report as your “financial resume."

Developing a good credit history at a young age can improve your options for getting a car, home, or business financing at the best rates. Your credit can also impact whether you get an apartment or even a career opportunity. If you manage your money wisely, credit cards can be a great way to get a jump start on establishing a good credit history. When not used wisely, credit cards can add debt, hurt your credit, delay investing, and increase financial stress levels.

To get more information on how to manage your credit wisely, save money, and reduce financial stress, attend one of our Investing & Credit Development for College Students seminars and keep the following tips in mind: 

• Credit cards are not for emergencies, and you should not get one so you can increase your spending ability. A credit card is a tool to develop credit and, if used properly, you can get them to pay you.
• Debit cards won’t help your credit score, but they are a great tool to learn to spend within your limits before getting a credit card.
• Only use a credit card for purchases you can pay off in full by the end of each billing cycle. Paying your balance in full helps you avoid high-interest charges.
• Charging more than 30% of your credit limit in a month hurts your credit score, even if you are making your minimum payments on time or paying in full. This percentage, called your credit utilization rate, makes up 30% of your credit score and credit agencies combine all your cards when looking at this.
• Only apply for credit cards that you need to support your credit development, business plans, or travels. Each application for a credit card can reduce your credit score. The extra 10% initial discount you may get for a retail store credit card may not be worth potentially decreasing your credit score.
• To build credit, you can start with one credit card. As your career and financial needs grow, you may choose to add additional cards over time. When used responsibly, multiple credit cards can help lower your overall credit utilization rate and demonstrate your ability to manage multiple accounts. 
• Monitor your credit report regularly to keep track of outstanding debts and ensure there are no accounts or transactions that do not belong to you.
• Freezing your credit is free, does not hurt your credit and protects you from most forms of identity theft. This blocks people from making any purchases or opening accounts in your name. You can unfreeze your credit to make a major future purchase or apply for future financing, and re-freeze it after that transaction is complete.
• Learn more about protecting yourself from identity theft.
• Annual Credit Report allows you to check your credit report for free once a year from all three credit reporting agencies: TransUnion, Equifax, and Experian. Checking your credit report does not hurt your credit score, but not checking it could.