Understanding Credit
Benefits Hub On-Demand: Understanding Credit
What to learn about credit? Here's a video (no audio) about what it is, how it's scored, how to check it, and good habits to establish on your financial journey.
Want to make a Benefits Hub appointment to talk about finances (credit, budgeting, etc.) or get public benefit assistance?
Visit: benefitshub.setmore.com and pick UW Bothell or Cascadia College
What is Credit?
Credit is your ability to borrow and the amount you borrow. As you build credit, you'll notice you're given a "credit score," this is essentially your financial reputation. Your score tells lenders how likely you are to repay loans, which helps lenders decide whether or not to approve your loan request and how much interest to charge.
What does the rating mean? A score of 760-850 is considered excellent. 700-759 is very good, 660-699 is good, 620-658 is fair, 580-619 is poor, and 579 or below is very poor.
Credit Score
Your credit score is a 3-digit number that determines your creditworthiness.
There are two types of scores: FICO and Vantage. Vantage are easier and free to access on sites like CreditKarma or Nerd Wallet (for example). FICO scores generally require a fee to check.
Some credit checks hurt your score, like applying for a new card, so be careful.
Conveniently, you can get a free credit report with your vantage and FICO scores from the three major consumer reporting agencies (Equifax, Experian, and TransUnion) once every 12 months from AnnualCreditReport.com
Why Does Your Credit Score Matter?
Low interest rates on credit cards and loans
Better chance for credit card and loan approval
Get approved for higher limits
Landlords looks at credit history before renting
Better car insurance rates
Cell phone with contract with no security deposit
Avoid security deposits on utilities
Employers may also care (like for federal job screenings)
How is Your FICO Credit Score Determined?
Your payment history (35%)
How much you owe (30%)
The length of your credit history (15%)
The type of credit you have (10%)
The amount of new credit you have (10%)
How to Improve Your Credit Score
Don’t close accounts after paying them off or when no longer in use
Keep below a 30% utilization rate
Use a mix of credit types
Don’t be credit invisible
Get a cosigner
Get credit for rent payments!
Still confused about all these terms? For another basic overview on credit, try Campus Well's Student Guide to Understanding Credit.
Stuck in debt?
See our Financial Budgeting page for tips, tools, and resources on budgeting and paying off debt. Don't get caught in the debt cycle. Contact the Benefits Hub team to learn about credit, budgeting, and financial goals! Schedule an appointment at benefitshub.setmore.com
Applying for a Credit Card
There are different types of credit cards available:
Secured credit card
Balance transfer credit card
Travel rewards credit card
Gas rewards credit card
Cash back credit card
Retail card
When applying for a credit card:
Know your credit score
Choose a card that fits YOU
ex: If you are a beginner or have bad credit, a secured card is a way to let lenders know you can be trusted because you give them a security deposit that becomes your credit limit.
Report your income
You will be offered a “credit limit”
If denied, call the reconsideration line
New to credit? Here's some places with recommendations for credit cards designed for students or people with no credit history: