What is Credit?



What Exactly is Credit?

Credit is a powerful financial tool that allows you to borrow money now to buy goods or services with the understanding that you’ll pay later.

Credit involves two parties: a creditor and a borrower. A creditor, such as a financial institution, will lend a borrower an amount of money (through either a credit card or loan) that depends on their confidence that the individual will pay it back.

After a given time period, the borrower is expected to pay the creditor the same amount of money, along with any finance charges, back.

What Is A Credit Score?

A credit score and a credit report provide a snapshot of the financial habits that financial institutions, cell phone companies, credit card companies, employers and others use to get a sense of your creditworthiness. A credit report is basically a report card that describes how well you are at paying back your credit, while a credit score is a number that ranges from 300 to 850 that tells financial institutions about your creditworthiness.

Having a higher, or “good,” credit score, is extremely helpful.  A higher credit score lets you borrow money at lower interest rates, meaning you will have to pay back a lower additional cost.


what is credit?


Your credit score is based on a number of financial aspects, including:

  • 35% – Your payment history. For instance, did you make a payment on time? Did you skip any payments?
  • 30% – How much you owe. You’ll want to use no more than 30% of your total available credit at any time. For instance, if your credit limit is $10,000, you want to use no more than $3,000.
  • 15% – The length of your credit history. For instance, how long have you demonstrated healthy credit habits?
  • 10% – The type of credit used. Do you have a mix of credit types? Note that you don’t need to use all types of credit to have a good credit score.

How Can I Manage My Credit?

To manage your credit, and maintain a high credit score, follow the below tips:

  • Pay your bills on time
  • Keep the balance of what you owe low
  • Do not spend more than 30% of your available credit at any time
  • Check your credit ratings at least once a year
  • Pay the full amount you owe each month, or pay more than the minimum balance
  • Check your account statement to make sure all listed purchases are correct
  • Request and review your credit report
  • If you leave the country or move, make sure to continue paying your credit bills


If you want to keep a closer eye on your credit score and stay on top of managing your credit, our credit features within our Online and Mobile Banking can help you do just that! You can:

  • View your current score, score analysis, and score trends (over the length of time you have been enrolled)
  • View information from your credit report including score, open trades, closed trades, balances, payment history, and more!
  • Access the ‘Score Simulator’ tool to see how adding a new credit line, paying a current loan down/off, etc. would impact your score
  • View other loan products that might benefit you
  • View alerts about your credit report such as score changes, credit usage changes, payment history updates, etc.
  • Use credit monitoring
  • And more!

Learn More

From Master Your Card USA

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