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Building Credit

A Little Bit at a Time

What is credit?

Credit is money available for you to borrow that must be paid back within an agreed-upon time period.

What is a credit report?

A credit report is a record of your past borrowing and repayment habits.

A good credit score makes it easier for you to obtain loans, open new cards, and secure low interest rates. Credit scores range from 300 to 850, and this number represents the predicted chance you will pay back a loan or credit card balance. The goal is to keep your credit score as high as possible.

Your credit score: the number matters

A credit score of 750 or higher is considered good, while a credit score of 599 or lower is considered bad. The average credit score in the U.S. is 689.

What is a Good Credit Score?

How the number falls

Your credit score decreases whenever a debt is repaid late, payment is defaulted, or when you open new lines of credit. Unfortunately, one late payment can easily damage your credit score for years.

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How the number rises

Your credit score rises with consistent, timely repayments of borrowed money.

Tips for building a good credit rating

  • Open a bank account. Lenders may want to see evidence of consistent savings.
  • Only apply for new credit cards when you need them. Credit scores go down every time you open a new credit card.
  • Pay all your bills on time.
  • Keep the balances on your credit cards low.
  • Apply for small or incremental loans and repay them on time.
  • Consider asking for a cosigner with an established credit history to get lower rates on large loans.
  • Secure a steady job. Lenders may ask for employment information.
  • Be vigilant about payments. Careless mistakes can affect your score for a long time.

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