To build a good credit history, you need to apply for credit and demonstrate that you can use credit responsibly. One of the best ways to start building your credit history is to apply for a credit card. Credit cards give you the ability to charge your purchases, rather than having to pay for them with cash or debit right away. Using a credit card responsibly (i.e. paying on time and not going over your credit limit) shows that you are able to manage your cash flow, which demonstrates to lending institutions that you are credit worthy.
Credit cards feature many advantages over other payment methods, such as protection against fraudulent charges1.
However, to fully enjoy the benefits and features of a credit card, it is important to use it responsibly.
How does credit card billing work?
Use your credit card to pay for purchases. Each month, the financial institution that issued your credit card sends you a statement telling you how much you spent on your credit card, and the minimum amount you must pay. If you do not pay the balance shown on your statement in full, then any grace period that may apply to your purchase transactions will no longer apply and your purchases will be subject to interest charges. Cash Advances made on your Account are always subject to interest charges. These interest charges will then be added to your outstanding balance. Interest rates for credit cards are often higher than for other types of credit, such as loans or lines of credit. So it’s important to use credit cards carefully and pay the balance in full each month. But if you cannot pay the full balance amount, you must make the Minimum Payment by the Payment Due Date that shows on your statement.
Credit reporting agencies
It is important to know what your credit report says (i.e. the report of your credit history). If you need a copy of your credit report, you can contact Equifax or TransUnion, the two main credit reporting agencies (also known as Credit Bureaus). These credit reporting agencies maintain a record of your credit history.
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