1. Why is credit important?

Credit is important if you want to accomplish things like leasing a car, renting an apartment, getting a job or getting approved for a credit card. Most banks and creditors will look at your credit score to assess whether they should trust to give you a loan or not. Building a credit history and maintaining a good credit score can have a big impact on your future.

2. What can a good credit score do for me?

With a good credit score, it enables you to apply for a credit card, take out a loan or even rent an apartment. A good credit score encourages lenders to loan you money. You may be able to get a lower interest rate on a credit card, saving you money to put in your pocket or help while repaying your balance.

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3. What’s a credit score?

Everyone has their own history of financial transactions in their name that add up to an overall score. Credit agencies keep records of your history of payment, how many credit cards you have, how much you owe and other factors. Based off of these, a number is generated by each credit bureau to allow lenders to determine the risk of lending you money, also known as your creditworthiness. With different scoring formulas available, it’s important to know what is taken into consideration. Some of the common factors that make up your credit score are your payment history, the number of open accounts you have and how long you’ve had each account open for.

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4. What if I don’t have a credit score?

Not having a credit score isn’t a bad thing, it just means you’ll have to start accruing some debt, paying it off and building your credit file. If you’re new to credit, there are a few things you can do to get started. One thing you can do is apply for a credit card that is aimed at new users, such as a secured or student credit card. If you are a student, there are credit cards designed with you in mind that offer tools to guide you through your new credit card journey, a moderate credit line to encourage responsible spending, along with rewards tailored to your spending needs.

5. How do I build or establish credit?

Practicing good spending habits can help build your credit. Begin by making smaller purchases and paying them off on time. Payment history is a significant portion of your credit history. Creditors pay close attention to whether or not you make your payments on time. If you have a credit limit on your card, keep your balances well under your credit limit. Also, keep the number of credit cards you have to a minimum – every new credit card is another item for creditors to review.

6. How can I improve and watch my credit score?

There are a few simple ways you can improve your credit score. Many websites offer free services where you can request a copy of your credit report. Be sure to check for any errors such as late payments, amounts owed associated with accounts and even your personal information. Any change in your credit report usually takes around a month to reflect onto your credit score. Try and reduce the amount of debt you owe by paying off as much as you can as early as you can. Set up reminders for payments and consider automatic payment schedules to avoid a late payment.

Discover card believes that consumers should be armed with the information they need to help them make informed credit decisions.

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

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