When seeking financial advice, one of the first recommendations you will often hear is the importance of maintaining a strong credit score. You may be wondering what a credit score is or how to achieve a strong credit score. In this article, we will break down credit scores and how to begin building yours.  

What is a credit score & why is it important? 

A credit score is a three-digit number that essentially indicates how well you manage your credit, typically ranging from 300-850. A credit score from 670-739 is generally considered good. Your credit score indicates to lenders how well you handle your money. As H. D. a Financial Services Officer at PCU explains, “The better you manage your credit, the better your score is and the better the interest rate will be when you are applying for lending products.” 

When you wish to borrow money or access credit, whether it’s for a home, a vehicle, a new bank account, or credit card, you should expect a credit check. A credit card can build credit by helping you establish a credit history. If you have a good credit history, it will increase your credit score.  

To help new borrowers build credit, H.D. recommends, “If you are new to credit start small, consider applying for a lower amount on a credit card.  Pay your bills on time and balances in full...Space out your applications as too many credit score inquires in a short time can lower your score as lenders will do a hard inquiry.  It best to wait six weeks between credit score checks.”   Each hard inquiry can cause a small, temporary drop in your score, and multiple inquiries close together may suggest to lenders that you’re taking on too much credit at once. By waiting at least six weeks between applications, you give your credit score time to recover and show lenders that you’re applying thoughtfully and managing your credit responsibly.

How do I build a good credit score using my credit card? 

• Purchase Only What You Can Afford 

The best way to build a good credit score using your credit card is to pay your monthly balance in full and on time. It is best practice not to purchase items on your credit card unless you can pay it off in full before you must begin paying interest. 

• Pay on Time 

Make sure to check your credit card payment due date! This is a common thing to forget among first-time credit card users. Paying late can negatively impact your credit history.  

• Pay more than the Minimum 

If you do end up carrying a credit card balance, do not just pay the minimum. Not only will you end up paying a lot more in interest, but it can also negatively impact your credit score.  

You can access your credit report through Equifax.  If you have questions about credit score or are looking to get your first credit card to start building your credit history, text us at 1-855-728-2211 or call your local branch.

TIP: Set up auto-payments so your full credit card balance is paid automatically each month from your chequing account.