What I wish I knew before getting my first credit card part 2.
Getting your first credit card is an experience that’s hard to forget. It could’ve coincided with some major life changes, like moving out of your childhood home or taking a year off before your first semester at college. Seeing your name on that little piece of plastic may have solidified your
newfound independence.
You’d carry your card in your wallet with pride. Your new grown-up status could’ve meant using your card to buy the things you needed, while treating yourself to a few indulgences every now and then. The problem may have come when “every now and then” turned into “more often than not” – leading to potential statement shock at the end of the month. Oops!
What you may not have realized when you got your first credit card was the responsibility that came with it. Perhaps you didn’t think about how your purchase and payment behaviour could impact your credit score. And speaking of your credit score, you might not have known its importance.
The credit card – more than a means to buy stuff.
Most people know the basics – get the things you need today, pay for them tomorrow. But did you know that your credit score could be a factor in helping you land your dream job or that sweet apartment near your favourite coffee shop?
Read on to learn how to use credit to your advantage — beyond purchasing a monthly subscription box of artisan treats for your dog.
Your credit score.
Your credit report contains facts about your behaviour with credit, such as your payment history, available credit, and the number and age of the credit accounts you have open.
Credit reporting agencies will generate a credit score – typically a number between 300 and 900 – based on your report. And, just like a report card — the higher the score, the better.
Why is your credit score important?
Your score gives lenders an idea of how responsible you are with credit. Do you make your payments on time? Do you have a history of exceeding your credit limit? Lenders review this info to get a sense of how likely/unlikely it is that you’ll meet your end of the bargain when it comes to important financial agreements.
Say you need a new car, a good credit score can help you get approved for a loan or a lease. What’s more, it can also help you get a lower interest rate on that loan.
You’ve found your dream job! Did you know that some employers review your score when considering you for a position?
Looking for a place to call home? Your landlord may take a look at your score before handing over the keys to your new abode.
Your score may also be used by lenders to decide whether they will do business with you – they’ll look into how much it will cost and what options they can offer. To sum things up, it can affect the interest rates you get, your lending and credit options, your ability to rent property and your eligibility for certain jobs.
Building and maintaining your score.
Now that you know how credit plays a part in everyday life, you can work toward using it as a tool to help achieve your financial goals.
Here are some ways to create healthy habits that could pay off in the future:
● Be careful not to spend more than you earn
● Create a budget and stick to it
● Stay within your credit limit
● Make your payments on time and try to pay more than the minimum payment to help reduce interest charges
● Check your credit score regularly with Credit Keeper™ from Capital One† to see how it changes over time
Hindsight is, well, you know. But taking a look at your goals and making a plan to achieve them may offer you some reassurance about using your credit card as a financial tool.
* If Quick Check pre-approves a card, you can be 100% sure we’ll approve your application as long as:
a. There’s been no change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards;
b. You’re at least the age of majority in the province or territory you live in;
c. Your application isn’t flagged for fraud prevention;
d. You don’t have an existing Capital One account; and
e. You haven’t applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.
In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.
†The credit score and report information by Credit Keeper is intended for educational purposes only. Lenders and other commercial users may use a different type of credit score and other information when making credit decisions.
Credit Keeper is a service offered by Capital One and is powered by credit information provided by TransUnion. Availability may vary depending on our ability to verify your identity and obtain your information from TransUnion. Credit Keeper might be unavailable to some Quebec residents.
TransUnion and associated names and logos are trademarks of TransUnion, LLC or an affiliate.