Credit Management Workshop Recap

What do you know about building credit? At our latest workshop we went over how to read your credit score and report, building your credit, staying safe from identity theft, and resources to learn more information about credit. Here is a quick recap of what you missed.

Credit is how you prove your trustworthiness to a lender. Basically, it tells someone if you can or cannot be trusted to repay your debts. That is why credit is so important. It is almost inevitable that at one point in your life you will need to use credit. A bad credit score can affect the possibility of getting student loans, a car loan, or even a home. Don’t be fooled by credit though. Credit equals debt. Debt means you have an obligation to pay back everything you borrowed (plus interest). Two types of debt that are associated are:

  • Secured Debt: backed by an asset. If you do not pay, a lender can take your asset (home or vehicle)
  • Unsecured Debt: not backed by assets (student loans, credit cards).

To understand your credit score you should know that credit score is a three-digit number that determines your creditworthiness. Commonly credit scores are FICO, which ranges from scores of 300-850, and Vantage.

Credit score is not solely based on making payments towards the money you have borrowed. Your credit score is made up like this:

  • Payment history – 35%
    • Past due items, how long they have been past due, and delinquent payments.
  • Amounts owed – 30%
    • Amount of debt and the proportion of your credit that is being used.
  • Length of credit history – 15%
    • How long you have demonstrated to be able to maintain your payments.
  • Credit mix – 10%
    • Different types of credit is good. This will improve your score since you can demonstrate you are able to handle different types of credit.
  • New credit – 10%
    • Number of new accounts and how many times you recently request new credit.

Find out your credit score today! You are entitled to one free credit report per year from three credit reporting bureaus.

PROTIP: Obtain a report every 4 months at

It is strongly recommended that you check your credit three times a year, once from each credit reporting bureau listed above. It is better to start your credit history with a good understanding of how credit works. Just like grades in school, it is harder to bring the score back to a good place once it has fallen.