Build Credit Responsibly: Be Smart About Credit

College can be a great time to start building your credit history–if you use credit products, like credit cards and other loans, responsibly. Your credit history stays with you for your entire life, and having good credit can lead to many opportunities in the future, including apartment rental, getting a home or a new car, and qualifying for the best rates on all types of loans.

Overview of Credit Products

In order to use credit responsibly, it's beneficial to familiarize yourself with the types of credit products that we make available to you as a member of UW Credit Union.

Credit Cards

A credit card allows you to make purchases without cash and pay for them at a later date. You receive a line of credit with a specified dollar amount as a credit limit. Each month, you get a bill that totals your card activity during the previous 30 days. If you pay less than the balance due in full each month, interest will be charged on the balance that you carry over to the next month's bill.

Learn more about Visa® Student Credit Cards »

Installment Loans

With an installment loan, you apply for a specific amount for a purchase, like a new car. When you are approved, you are given a lump sum of money which is used to make that purchase. Repayment is made in installments over the term of the loan, meaning you'll make equal monthly payments until it is paid off. Interest is charged based on the principal balance you owe.

Lines of Credit

A line of credit is an amount of money available to you, and you use only what you need from that line. Our overdraft protection/reserve line of credit service works like this, but we recommend using this only as a last line of defense, not for spending money. Unlike a loan, there are no payments to make unless you use the line of credit.

Tips for Using Credit Responsibly

• Pay all your bills on time. Doing so helps you avoid fees and builds your credit score.
• Set up Email & Text Alerts so you get a notification when your bill is due.
• Pay as much as you can of your credit card bill–at least the minimum due and ideally the entire balance. The more you can pay the less interest it will cost.
• Use your credit card for emergencies only. For routine purchases, use your debit card or cash and pay as you go. Or, use your credit card for one or two small purchases a month, and pay the bill in full each time.
• Budget so you know you'll have enough money in your accounts to pay your bills.
• Ignore the credit card offers you will receive in the mail. Many of these offers are "too good to be true," and have high rates and annual fees.
• Review your credit report & monitor your score. As you start to build your credit, it's important to review your credit report annually to make sure that it's being properly reported. You can do so for free at annualcreditreport.com. Learn more about credit reports. In addition, check My Credit Score in Web Branch so you're aware of your credit score.

For more information about credit history, check out our educational articles.

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