Successful Credit Use

Credit is the ability to borrow money now and pay it back later, with interest. In a positive credit transaction both the borrower and the lender should benefit. The borrower gets to buy what they need immediately and the lender will receive interest as the debt is repaid. Learn more about credit in the Your Money Matters guide for college students.

::Building Credit::

Establishing a favorable credit history is a pretty smart financial move. Lenders prefer borrowers with a positive history of paying their bills on time. If you’ve never used credit before, then you’re a mystery to creditors. If you’re at least 18 years old you can legally enter into a credit contract, however, federal rules now make it more difficult to qualify for a credit card. No one under 21 can get a credit card unless they have a co-signer with established credit or can prove steady employment and ability to repay the debt. If you’re unable to qualify for a credit card from a major credit card issuer, consider the following alternatives to establish a credit rating:

Once you demonstrate that you’re a responsible credit manager by paying your bill on time and in full, major credit card issuers may be more willing to extend credit to you.

::Choosing a Credit Card::

Credit cards aren't all the same and the card you choose should have features that fit your financial lifestyle. Consumers often choose a credit product based on clever marketing and a low “introductory” interest rate. Unfortunately, introductory rates will go up over time. If you haven’t paid the balance in full before it happens, you’ll pay more for credit you’ve already used.
For the best deal, choose a credit card that:

Before you apply, compare credit cards online through websites like and

If you already have a credit card but want a better interest rate, ask your creditor to match lower rates offered by competing companies. If you have a positive payment history, they’ll most likely lower your rate to keep your business.

::Smart Credit Use::

Credit cards shouldn’t be used to spend more than you actually have. If you charge a $20 pizza, because you’re hungry and out of cash, you’ll most likely still be paying it off with interest long after the leftovers are gone. Instead, consider credit cards a safety net for emergencies, like a blown tire or a visit to the emergency room.

Here are a few more tips for using credit wisely.

::Managing Credit::

Credit decisions you make today can dramatically affect your future ability to get credit, and much more. Lenders, insurers, landlords and even potential employers may determine whether you’re a good risk by checking your credit report. Your credit report is compiled by three for-profit consumer reporting agencies that collect information on your spending and debt repayment habits. Your credit score is determined based on this information.

Developing and maintaining a favorable credit history is one of the most important things you can do for your future. Here’s how:

::Monitoring Credit::

It's important to monitor your credit report on a regular basis to ensure your information is correct and your credit isn’t being used fraudulently. Mistakes on reports are common, but identity theft is also a growing problem. It’s best to check your credit at least once a year.

We recommend using This website is the only one authorized by federal law to provide a free annual credit report from each of the three major consumer reporting agencies. If you need to order additional copies of your report, want to purchase your credit score or have questions you can contact each agency directly:

If you need to dispute a mistake, follow the directions on the back of each credit report.