Credit can feel overwhelming—especially if no one ever explained it to you. But once you understand the basics, it becomes a powerful tool to help you reach your financial goals.

Whether you’re starting from scratch, rebuilding after a few bumps, or just trying to stay on track, here’s a clear look at what credit is, how it works, and how to make it work for you.

What Is Credit?

Credit is your ability to borrow money and pay it back later. When people talk about "good credit," they’re usually referring to their credit score—a number between 300 and 850 that tells lenders how trustworthy you are as a borrower.

What Affects Your Credit Score?

Your credit score is made up of five main factors:

1. Payment History (35%)
Paying your bills on time is key. Even one missed payment can hurt your score.

2. Amounts Owed (30%)
How much of your available credit you’re using matters. Try to keep it below 30%.

3. Length of Credit History (15%)
The longer you’ve had credit—and used it responsibly—the better.

4. Credit Mix (10%)
Lenders like to see a healthy mix of accounts, such as credit cards, car loans, or a mortgage.

5. New Credit (10%)
Opening too many new accounts at once can be a red flag. Do your research before applying.

Building Credit from Scratch

Just starting out? Here are three simple ways to build credit:

• Get a secured credit card: You put down a deposit and receive a card with that amount as your limit.
• Become an authorized user: A trusted family member or friend can add you to their credit card to help you build history.
• Apply for a credit-building loan: Some banks offer small loans placed in savings accounts that help build your credit as you repay.

Use your card for small purchases—like gas or groceries—and pay it off monthly to start building healthy habits.

Rebuilding Credit

If your credit has taken a hit, don’t worry—you can bounce back:

• Check your credit report at AnnualCreditReport.com for any mistakes.
• Make consistent, on-time payments—this is the most powerful way to rebuild.
• Pay down existing debt, starting with high-interest cards.
• Keep old accounts open to help with your credit age and available credit.

Maintaining Good Credit

Once you’ve built or rebuilt credit, stay strong by:

• Keeping balances below 30% (10% is even better).
• Limiting new credit applications.
• Paying more than the minimum when you can.
• Checking your score regularly.

Final Thought

Think of credit like a house: building lays the foundation, rebuilding repairs the structure, and maintaining keeps it strong over time.

With the right habits, credit doesn’t have to be scary—it can be a smart tool for your future.

Visit Kate and her team at 117 Raymond Hirsch Parkway, give them a call, or visit their website.