Establishing and Maintaining Personal Credit

So what is a credit score, anyway? And how can I find a copy of my credit report? Carrying a balance on my credit card from month-to-month helps to improve my credit score, right?

These questions are common for young adults to have as they begin their journey to long-term financial wellness. Obtaining your first credit card can be a little overwhelming with all the available choices and advertisements seen on a daily basis. And after receiving a credit card, how do you know if your card is actually a good fit for you?

Types of Credit Cards

It's important to first understand the different types of credit cards that are available to you as you begin building a credit history. Below are some of the most common types of credit cards: 

  • Student - Some companies carry student credit cards that are typically easier to qualify for.
  • Rewards - Cash back, airline miles, dining rewards, etc. These types of cards generally have higher interest rates and can carry an annual fee.
  • Retail - Offered by retailers, these cards typically have in-store rewards and lower credit limits. Usually not worth it unless you do a significant amount of shopping at that particular store.
  • Secured - For consumers with no credit or poor credit. They require you to deposit an amount equal to your credit line with the bank that issues your credit card.
Understanding Your Statement

If you already have a credit card, have you ever looked at everything included in your monthly statement? Do you know what your APR is, how to find it, and why it's important? What about the Schumer Box?

  • The APR (or Annual Percentage Rate) is a yearly representation of the cost involved with "borrowing" money on a credit card. Most cards come with an APR of 13-22% per year.
  • The Schumer Box is a table that discloses pertinent information about a credit card, including interest rates, any grace periods, minimum charges, annual fees, transaction fees, and penalty fees. Before signing up for a credit card based on the introductory offer, make sure to look at the Schumer Box to fully understand the terms.

The most important thing to remember when managing a credit card is to always pay your bill in full and on time.

Credit Scores & Reports

Credit Scores

Maintaining a high credit score gets a lot of attention, but what actually goes into a credit score remains a mystery for most consumers. Most credit scores range from 300-850, with scores of 750 and higher considered excellent. The higher your credit score is, the more likely you are to be issued a loan with favorable terms. 

Credit Reports

While less popular than the credit score, a credit report is actually a more important measure of your financial well-being. Credit reports contain information including:

  • Personal information (name, social security number, known addresses, etc.)
  • Satisfactory and unsatisfactory credit accounts
  • Potentially negative items (bankruptcy, public records, etc.)
  • Requests for your credit history
  • Contact information for the bureau doing the reporting
  • Your consumer rights

Follow this link to view a sample credit report

An easy way to differentiate between a credit score and credit report is to think of the credit report as the financial 'work' you've done, and the credit score as the 'grade' you receive for your work. Did you know that you can access your credit report once per year with each of the three major credit bureaus (Experian, Equifax, TransUnion)? Review yours at