Credit

It all starts with your Credit Score.

Check your Credit Report and find out what’s impacting your score now.

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Credit: What is it?

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Basically, credit is the ability to borrow money from someone with the understanding that you’ll pay it back later, generally with some sort of interest payment or fee associated.

Lenders will only give to people they feel fairly confident will pay them back sooner rather than later.

You must build up that trust, which is based on your credit score, an aggregate of your credit history gauging how trustworthy of a loaner you are

How Credit Works


Your credit worthiness is gauged by your credit history.

Your credit history is summarized in files known as credit reports, compiled by three independent credit bureaus—Experian, TransUnion® and Equifax®.

All creditors should be voluntarily reporting your borrowing and repayment actions to the credit bureaus, whether they be credit unions, banks credit card issuers, or any other creditors nobody is exempt or going to purposefully not report your activities.

Your credit report may include several things like:

  • The number of cards you have, limits, and balances
  • Loans you have taken out and how much you have paid back
  • Whether monthly payment is on time, late, or never show up
  • Severe financial setbacks like foreclosure, repossession, or bankruptcies

Your credit score isn’t the end all be all when it comes to securing any type of credit, but this is the main tool nearly everyone is going to use to narrow lending decisions. Your credit score takes all of the many details and factors in your lending history and turns it into an easy to interpret, hard to influence or bias number for lenders to consider.

Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO Score than FICO Score 8, or another type of credit score altogether. Learn More

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Experian.com
Types of Credit

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  • Revolving Credit: Revolving credit gives you a set maximum borrowing limit. You have to make a minimum payment each month, but you can pay up to the full amount. If you only make partial payments you carry forward that balance, revolving the debt. Most credit cards count as revolving credit.
  • Charge Cards: Charge cards use to be commonly issues by retailers for their establishment, but they’re very uncommon now. Charge cards are used just like credit cards but you are required to pay off the charges in full every single month.
  • Service Credit: These are contracts with service providers that understand you use their services each month but you don’t pay until after you’ve already used whatever the service may be, and this is generally at the end of every month. These can be providers like electric and gas utilities, cable/internet providers, also cell phone companies, you have credit agreements with all of these service providers.
  • Installment Credit: Installment credits may sound like something new or strange, but your car loans, mortgages, and student debt loans are all great examples of an installment credit. An installment credit is basically just a loan for a set amount of money that you agree to repay in regular monthly payments over a set period of time, plus any interest and fees you may gather.

creditWhy you need GOOD credit

green lineTruly the reasons that you want to have good credit are nearly endless. We could list things all day but we’ll keep it towards the most important things. You need to have good credit if you ever plan to borrow money for a major purchase, things like a car or home. Many people also like to take advantage of the convenience and protection a credit card offers, and you can’t get one of those without a good credit score.

A higher score can mean better interest rates on credit cards and loans, plus many card companies reserve the best rewards for those with great credit. A lot of people check credit scores, it could include landlords, insurance companies, utility companies, even potential employers may use information from credit reports in a hiring decision.

Think of credit as a tool to help you buy big things you really need now, that you are then going to pay for over time. Establishing and building up good credit is a key element to good financial health. If you really want your credit to do well go ahead and do your best to make those payments in full every month.