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Managing Your Credit

Establishing a healthy financial lifestyle can help you accomplish amazing things. No matter what your dreams may be, knowing how to manage your credit can help you get there.

If you’ve ever wondered about the difference between a debit card and a credit card, you’re not alone. There’s a lot to know when it comes to understanding debit versus credit and other payment cards. We’re here to help you understand your financial choices every step of the way, so you can decide which option works for you.

How to Manage Your Credit

Feel proud of what you can do with your finances by knowing how to use credit to your advantage.

Types of credit cards

  • Rewards and non-rewards

A rewards credit card can include a point system or program which allows the cardholder to earn travel, merchandise, cash back or gift cards with their purchases.

A non-rewards credit card may have a lower rate; however, this is based on a cardholder’s creditworthiness.

  • Secured and non-secured

A secured credit card is tied to a savings account, so the credit limit is established based on the amount in the savings account.

A non-secured card does not require a savings account to secure it and the credit limit is based on the card applicant’s creditworthiness.

  • Annual fee vs. no-annual fee

Some credit cards may have an annual fee, which a cardholder would be responsible for in addition to any interest rate fees.

Other credit cards may not have an annual fee for use of the card.

Understanding credit scores

  • What is a FICO™ credit score?

    FICO is an abbreviation for the credit score company Fair Isaac Corporation. Your FICO credit score is a snapshot of your credit history based on the information in your credit report. It helps lenders determine the risk in giving you a loan. Learn more about FICO credit scores

  • What affects my FICO credit score?

The factors that determine your FICO credit score are:

  • 35% Payment history: paying your bill on time
  • 30% Debt to credit ratio: the amount you owe versus your total loan amount or credit limit
  • 15% History length: the length of time you've had a credit history
  • 10% Inquiries: any new inquiries on your credit
  • 10% Accounts: the types of credit accounts you have
  • Impact of your FICO credit score

    The FICO credit score range is 300-850. The higher your score, the lower the risk you are to lenders. Your score affects whether you qualify for a loan, the annual percentage rates (APRs) you receive and the terms lenders offer you. Understand more about the impact

Tips for managing your credit

  • Always pay on time
    Paying your credit card bills on time every month is the easiest way to maintain a good credit score. This alone makes up 35% of your credit report.

  • Monitor how much you use
    Keep the total amount you owe under 30% of your total available credit to help improve your credit score. This is also true for individual credit cards; try to keep your balance under 30% of a card's limit.

  • Check your credit report once a year
    Download your free credit report from each of the three credit reporting companies—Equifax, TransUnion and Experian—at annualcreditreport.com. Review each one and report any inaccuracies to protect your credit. Download your free credit report

  • Avoid applying for more credit all at once
    Applying for multiple credit cards at the same time can negatively affect your credit score. If you want a new card, research different offerings and apply to the one with the best benefits for you. Compare credit card to debit card features

Ways to manage debt

  • Pick a payment strategy.
    There are different strategies for reducing debt—such as paying off balances from smallest to largest, or paying off debt with the highest interest rate first. The best way to become debt-free is to establish a plan and stick to it. See how long it will take to pay off debt

  • Consolidate your debt.
    One way to simplify getting out of debt is to combine high-interest loans, payments or other debts into a single loan. This could help lower your interest rate, lower your monthly payment and help you become debt-free faster. Calculate the best way to consolidate debt