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Frequently Asked Questions
Q: What is credit?
A: Credit is when you receive money, a good or a service, and you agree to pay for it in the future—usually with added interest. Nowadays, we use credit to buy lots of things, from houses and cars to groceries and clothing. If you use it responsibly, credit can be a useful tool. But if you don’t, you’ll have to face some negative consequences that will make your life harder.
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Q: What is a credit score?
A: Your credit score is a 3-digit number on a scale of 300 to 850 that suggests how creditworthy you are—meaning, how good you are with credit and how much you can be trusted to pay back what you borrow. Potential lenders will use this number to decide what kinds of credit cards and loans to offer you. Generally, the higher the score, the better the offers. There are a few different types of scores, but the two best-known are your FICO Score and your VantageScore. They’re calculated based on the information that shows up on your credit report.
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Q: Why does having great credit matter?
A: Society is becoming increasingly dependent on using credit to make purchases and decisions. These days, good credit is used for more than just getting a credit card or a loan. More and more businesses are making the case that you must have good credit before they extend products or services to you.
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Q: How does it affect me?
A: It Affects Where You Live and How Much You Pay
It Affects What You Drive and Your Car Payment
It Can Affect Your Job Search
It Affects Your Ability to Start a Business
It Affects Other Monthly Bills
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Q: What is a credit bureau?
A: Essentially, a credit bureau is a company that tracks your ability to pay. They collect information relating to your financial habits, then make this information available to lending institutions and credit card companies. There are three credit bureaus–Equifax, TransUnion and Experian.
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Q: What is on your credit report?
A: Your credit report contains things like your identifying information, trade lines, credit limits, account names, credit history, credit inquiries, public records, collections, late payment information, and of course, and your credit score.
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