What You Need to Know About


National Disability Institute has partnered with Experian to answer your questions about building credit and paying off debt.

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What is credit?

Credit is the option to purchase something now and pay for it later. When someone says you “have good credit” it means you have paid back for things you have purchased using, for example, a credit card or a loan on time and this is what gives you a positive credit history.

Credit Basics

Why do I need credit?

During your life, there will be many times when your credit score can help you save money and qualify for things like renting an apartment, signing up for utilities, getting an affordable loan for a car and possibly even being hired for some types of jobs. It is important to build a positive history using credit. You can do this in different ways such as opening a credit card or using a credit-builder loan to show your responsible repayment habits.

Quick Tip: Once you earn a good credit score, you will qualify for better rates and terms on credit cards and loans in the future. A good credit score can save you money when you need to borrow money for a purchase or an emergency.

What does it mean to not have a credit history or to have a "thin" credit file?

If you do not have a credit history or have a thin credit file it likely means you have not had a credit card, loan or another type of account that is reported on your credit report. Nothing or very little has been reported to the credit bureaus showing that you pay credit on time to make your credit report, which may mean you are unscorable. People with no credit histories are sometimes referred to as “credit invisible.”

A thin file means you may have some credit history established, but not enough accounts and payments to give scorers a complete view of your history with using credit. Having a thin file can make it difficult to get the best rates and terms even when you are approved for credit.

How do I build a positive credit history?

You build a positive credit history by taking steps to be approved for credit and then actively using and responsibly managing your credit. This can be done with good habits such as making on-time payments on any credit or loans.

Start by getting a credit card such as a starter card or secured card made for people new to credit. You can also get a credit-builder loan, which is a loan specifically designed to help you build credit.

The way a credit-builder loan works is that you first start by making a small deposit each month into a credit-builder account. The deposits are called installment payments. When you complete making all of the required deposits, you will then get the total balance back, possibly with interest.

Quick Tip: A credit builder loan helps you show lenders that you can put aside money to make installment payments. This type of loan allows you to build credit and savings at the same time.

What is a credit score?

A credit score is a three-digit number that predicts how likely you are to pay back a loan on time based on information from your credit reports. It is important to know that you do not have just one credit score. There are many credit scores available to you as well as to lenders.

How do I know if my credit score is good or not?

A good credit score is around 700. Credit scores typically range from 300 to 850 depending on the different models used to calculate the score, such as a FICO Score.

Quick Tip: You can build your credit score up to 700 and higher by paying bills and credit card balances on time, keeping use or “credit utilization” (the amount of credit you’re using vs. the amount of your credit limit) low and having a good mix of credit accounts like credit cards and loans.

What is a credit report?

A credit report or credit history is a record of your repayment habits with debt such as loans or credit cards. Your credit report is typically used by lenders to evaluate your creditworthiness for new credit accounts.

The type of information contained on your credit report includes:

  • Your current name and any past names
  • Your current address and address history
  • Employer history
  • Credit and loan accounts
  • Payment history for open and closed credit and loan accounts
  • Records of accounts turned over to collections
  • Bankruptcy records
  • Hard inquiries from when a creditor pulled your credit report for a loan application, which may have dropped your score
  • Soft inquiries from when a creditor pulled your credit report to offer a prequalification with no impact to your score

Quick Tip: As you use newfound credit, keeping an eye on your credit report can help you manage credit choices to improve your score. For instance, you may notice that your score goes down when the balance on your credit card is high. In the following billing cycle you can aim for a lower balance—or lower credit utilization by keeping the amount of credit you’re using below at least 30% of the amount of credit you have—to improve your credit history.

How can I check my personal credit report?

You can check your annual credit report—or ACR—for free by going to annualcreditreport.com.

By Phone: Call 1-877-322-8228. Deaf and hard of hearing consumers can access the TTY service by calling 711 and referring the Relay Operator to 1-800-821-7232.

You can request copies of your credit report from each of the three credit bureaus: Experian, Equifax and Transunion. You are entitled to a free copy of your credit reports once every 12 months* from each of the three credit bureaus.

Accessible versions of your credit report are available in large print, Braille or audio format.

* As part of the CARES Act, consumers can order a report from each of the bureaus weekly until April 20, 2022.

Quick Tip: You can request all three reports at once or you can order one report at a time. By requesting the reports separately (for example, one every four months) you can monitor your credit report throughout the year.

Does my credit report affect my ability to get a job?

Generally, your credit will not affect your ability to get a job, but you should be aware that hiring managers may be able to access your credit report. To do this, they would need to ask you for your permission. This is more likely to apply when interviewing for a financial or managerial role. If an employer wants to check your credit report, they must request written permission from you during the application process.

Potential employers will receive a limited version of your credit report which will not include in-depth  personal information such as your age. It will show your payment history, account balances, collections, bankruptcies and foreclosures.

Some states prohibit hiring managers from making hiring decisions based solely on credit reports. You must be informed if your credit report contributed to the decision not to hire you and be given the chance to dispute any issues on the report.

What strategies can I use to pay off my debt?

Two main strategies can help you tackle your debt repayments. In the Debt Avalanche Method, you pay off your debts with the highest interest rates first to prevent the loss of more money to interest. This method will help you reduce the overall interest you pay so you can save money for other needs.

However, if your biggest accounts are the ones with the highest interest it may feel discouraging to try to tackle them first. So another approach is to use the Debt Snowball Method, which starts with the bill that has the smallest total. This way you can pay something off faster and gain confidence and momentum to tackle the next one. Do what feels right for you!

You can also use consolidation to make paying off your debt less complicated. Often debt consolidation loans are secured on something you own. If you cannot repay this loan on time you could lose the item that the debt is secured to like you vehicle or home. By taking a debt consolidation loan you can transform several payments into one loan payment. You can also transfer credit card debt to a balance transfer card with a lower interest rate to save money while paying down your debt. Often, an interest fee is charged for the transfer, adding to the balance owed.

How can I protect myself from identity theft?

Identity theft occurs when someone uses your personal information to access your financial or shopping accounts or create new accounts under your name. You can protect yourself by taking a few simple steps:

  • Don’t give private information such as your name, address, date of birth, social security number, or credit card number to callers
  • File and secure private documents such as your social security card, letters from the Social Security Administration
  • Use complex passwords on devices such as smart phones, tablets and computers, and update them annually
  • Mix up your passwords and use unique ones on each account
  • Only record passwords in a secure password manager or locked in a file
  • Spot phishing attempts and don’t click on suspicious links
  • Check your credit reports for unusual activity
  • Don’t carry all of your credit cards at once
  • Shred documents you no longer need
  • Keep important documents such as marriage, birth, death certificates, W2’s, photo identification cards, and social security cards forever

Each step you take to secure information or accounts that could be misused is a step against identity theft.

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National Disability Institute

The Financial Resilience Center was developed by National Disability Institute with generous funding from the Wells Fargo Foundation.

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