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Financial Tips

How to build credit and be awesome

Getting your first credit card is a big step toward a successful financial future! Here’s what you need to know as you start using your card and building credit:

What does building credit mean?

When you charge things to your credit card, it’s a type of loan. Your card’s financial institution (that’s us!) is agreeing to cover your purchases when you make them, and you’re agreeing to pay us back each month. Repeating this process over time is known as building credit.

Learn more about building credit.

Why is building credit important?

A credit card balance is a relatively small loan. Eventually, you may want to take out a bigger loan for a car or a house. When you’re at this stage, people will look at your credit history to see how well you did in paying back the smaller loans before they trust you with a bigger loan.

What is a credit score?

This is a 3-digit number that predicts how likely you are to pay back a loan. Scores range from 300-850, with the higher score indicating a greater likelihood of repayment.

Learn more about credit scores.

Your credit score is calculated from data on your credit reports at the three major consumer credit reporting agencies: Experian, TransUnion and Equifax. You can get a free copy of your credit report from each agency once a year, although it won’t contain your score.

Request a credit report.

How do I see my credit score?

Stanford FCU shows you your credit score for free, and it’s updated every three months. Just log into the mobile app (App Store | Google Play), then go to Services > View Credit Score.

How do I build good credit?

1. Pay your credit card bill on time. It’s a good idea to set up Auto-Pay so you don’t forget.
2. If possible, pay the full balance on your card each month.
3. Keep your card open and active. Credit reporting agencies look at how long you’ve been a borrower and if you’re using your card. It could be as simple as using your card for your next coffee or grocery store run.
4. Keep your credit card balance at least 20% lower than your credit limit. For example, if you have a $500 credit limit, your balance shouldn’t exceed $400.

Read more financial tips for college students.

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