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Credit Health: What Are Your Goals?

Whether you want to establish, improve or maintain your credit score, we’ve gathered tips, tools and resources to help you achieve your goal.

What Is Credit and Why Does It Matter?

Video Transcript for What is Credit?

(SPEECH)
- Do you guess what my friends are always asking me about? Credit. What is credit? Why do I need it? How does it work? Where do you get it? Does someone hand it out? No, seriously, someone asked me that.

(DESCRIPTION)
Text, Navy Federal Credit Union. Making Cents. What is credit? A woman sits at a desk with a laptop in front of her. Her shirt says Navy Federal Credit Union. A man sits at an identical desk beside hers but is facing the opposite direction. She waves.

(SPEECH)
They think just because I work at Navy Federal Credit Union that I know all the answers to their financial questions. Hi, I'm Amber. And the truth is, my job here has allowed me to work with some of the sharpest minds in finance. And they've taught me a ton about meeting money goals. And if I don't know the answer, I know someone who does.

(DESCRIPTION)
The man sitting at the nearby desk looks at her, pursing his lips.

(SPEECH)
Maybe not him, but you know what I mean.

- Seriously?

(DESCRIPTION)
Clip art appears in a bubble next to the woman. It shows credit cards, a car, and a house. Then there is a hand holding a meter. Text, Financial Power. A bubble says 750. It goes down to 300 and then up to 850. The meter gets higher and higher and then a magnifying glass hovers over it. A car appears next to the meter. Text, Approved, Declined.

(SPEECH)
- So here's my insight into credit. That way, if you're trying to get a credit card, buy a car, or a home, and in some cases get a job, you know what you're doing. After all, that's what I'm here for. MakingCents of your money together. In a nutshell, credit is part of your financial power. It helps you borrow money or purchase a product. And a three digit number is associated with your credit. That number is your credit score. Usually ranging from 300 to 850. Generally, the better your history of repaying debt, the higher your credit score.

So when you apply for a car loan, lenders will review your score and repayment history, and either decide you're likely to pay back the money or you're not. Plus, your score typically gets used to determine your interest rate. Higher credit score, lower interest rate, which ultimately saves you more money in the long run. Now that what credit is, how it works, and why need it, do you know where your credit stands? Here's a smart money strategy for you. Navy Federal members can view their credit scores for free using our Mission: Credit Confidence Dashboard to see how their credit holds up.

(DESCRIPTION)
Text, Mission, Credit Confidence Dashboard. Clip art of a man sitting cross-legged, holding his phone. An oversized laptop is behind him, and a blue circle next to him says 710. The man sitting at the desk raises his hand.

(SPEECH)
- For the record, I am one of those sharp minds.

(DESCRIPTION)
He points to himself. The woman furrows her eyebrows and lifts up her hand.

(SPEECH)
- Sure you are, Bryan. Sure you are.

- She messing with me?

(DESCRIPTION)
The man furrows his eyebrows, glancing at the woman. The woman smiles. Text, Navy Federal Credit Union. Making Cents. For more smart money tips, visit: navy federal dot org forward slash making cents. Insured by N C U A. This information is not legal or financial advice. Instead, it is provided for general informational purposes only. You should consult your own attorney or financial advisor regarding your particular situation. The credit score and report you will receive through Mission, Credit Confidence Dashboard is a Trans Union credit report with a Trans Union Vantage 3 Score.

Audio Described Video for what is credit

Your financial power

Learn the Basics

Set yourself up for success by learning the basics of credit, why you need it and how it works. After all, a strong credit history can help when:

  • opening a new credit card
  • buying a car or home
  • applying for a job

 

Get Your Credit Report

The 3 national credit reporting agencies—Equifax®, Experian® and TransUnion®—are required to provide you a free copy of your credit reports once a year. You can request and review your reports at annualcreditreport.com. If you find an error contact the credit bureau directly to file a dispute.

How To Build Credit

Credit is an important part of your financial life. Do these 3 things to start your credit journey off strong:

  • Apply for a Secured Card

    A secured credit card works like any other credit card, but it’s backed by a cash deposit—which makes it a perfect starter card for building credit.

  • Consider a Co-Signer

    If you’re having a hard time getting approved for a loan on your own, adding a co-signer with an established credit history could help.

  • Use Your Credit Wisely

    Create a budget and spend only what you can comfortably pay back. Be extra vigilant about making payments on time and try not to use all available credit.

See More Ideas for Building Credit

Video Transcript for What Makes Up Your Credit Score?

(SPEECH)

- Do you know how to build credit if you don't have credit?

 

(DESCRIPTION)

Logos, Navy Federal Credit Union, Making Cents. Text, How Can I Build My Credit?

 

(SPEECH)

Here's the deal. When I applied for my first apartment by myself, I found out there was no data on me, no credit, literally nothing.

 

(DESCRIPTION)

Brian sits at a desk. The woman at the desk behind him turns and smiles.

 

(SPEECH)

- He might as well have been a ghost. Did they call you Casper?

 

- Good one. Bryan here. I once had to build my credit from scratch. That's what my boy, Chris, is doing right now.

 

He's away at basic training. And he recently tried to open up his first credit card. And he found out he had no credit. Got me thinking, lots of people probably don't know how to build credit from scratch. And to some it may seem like a difficult task when you need credit to get credit.

 

- Listen up, because they don't teach this in Home Ec. Is Home Ec. still a thing?

 

- Doesn't matter. Here's how you can build it with these three smart money strategies.

 

(DESCRIPTION)

Text, Smart Money Strategy.

 

(SPEECH)

Apply for a secured card.

 

(DESCRIPTION)

Animated credit card paperwork appears.

 

(SPEECH)

Creditors don't know if they can trust you with a line of credit yet. So you basically offer to make it safer for them.

 

You put up, let's say, $300.

 

(DESCRIPTION)

An animated bar fills up from 0 to $300.

 

(SPEECH)

That money is held in a savings account and it serves as your line of credit. You can use it the same way you use any other credit card. And it's a great way to monitor your spending. After months of making regular on time payments and keeping your credit use low, typically under 30%, or in this case $90, some credit card companies may upgrade you to an unsecured credit card with a higher limit.

 

(DESCRIPTION)

An animation appears of two credit cards on an icon of two people.

 

(SPEECH)

Get added as an authorized user on a family member's credit card. You'll have two choices. The family member who either trusts you a lot and gives you your own credit card with access to a credit limit that they set. Or you're an authorized user in name only.

 

(DESCRIPTION)

An animation of of an account page with two users appears.

 

(SPEECH)

Either way, you have to trust that family member to maintain healthy credit habits. If they do, you can enjoy the benefit of your credit history growing.

 

(DESCRIPTION)

A dial representing a credit score moves from right to left to indicate falling credit.

 

(SPEECH)

But if they don't, your credit can suffer along with theirs.

 

(DESCRIPTION)

A calendar and clock icon appears.

 

(SPEECH)

And most importantly, make payments on time. Your repayment history is crucial to your credit score.

 

(DESCRIPTION)

Icons for credit card, mortgage and utility loans appear and animated bills move into them. Text, Make payments on time.

 

(SPEECH)

Pay credit card companies, loans, utility bills, and other accounts on time for at least the minimum payment. Missed payments could lower your credit score quickly. Not great if you're trying to build it up.

 

(DESCRIPTION)

An icon representing a missed car payment appears and the credit dial moves to the left as an exclamation point appears beside it.

 

(SPEECH)

So let's recap.

 

(DESCRIPTION)

A double arrow icon labeled Recap appears.

 

(SPEECH)

You can apply for a secured credit card, become an authorized user, and make sure you pay your bills on time. With those simple steps you could be on your way to building up your credit so you no longer feel like a ghost. Now, how to find out why that person ghosted you? That's a discussion for another day.

 

(DESCRIPTION)

The woman at the desk behind Brian turns.

 

(SPEECH)

- Yeah, Bryan's still trying to figure that one out.

 

- Here's you and me MakingCents of your money together.

 

[AUDIO LOGO]

 

(DESCRIPTION)

Brian and the woman push their desks away in opposite directions.

 

Logos, Navy Federal Credit Union, Making Cents. Text, For more smart money tips, visit: navy federal dot org slash making cents. Insured by NCUA. This information is not legal or financial advice; instead, it is provided for general informational purposes only. You should consult your own attorney or financial advisor regarding your particular situation. The credit score and report you will receive through Mission: Credit Confidence Dashboard is a TransUnion credit report with a TransUnion Vantage 3 Score.

Audio Described Video for how can I build my credit

UNDERSTANDING YOUR CREDIT SCORE 

How is your credit score calculated?

Generally, 5 factors determine your credit score: payment history, amount owed, length of credit history, new opened credit accounts and types of credit.

about credit scores and reportsLearn more about how your credit score is calculated

More Resources to Build Your Credit

How To Repair Credit

When you’re trying to rebuild credit, small decisions can have a big impact. Take these 3 actions today to start getting your credit back on track:

  • Schedule Your Payments

    Late payments can ding your credit score. Create calendar reminders or set up autopay to make sure you never miss a due date.

  • Review Your Budget

    Look for ways to make your money go further and reduce unnecessary expenses, so you can prioritize paying down existing balances.

  • Pay Down Debt

    When possible, always pay more than the minimum payment. Even a few extra dollars a month can help you lower debt faster.

Try a Secured Card

IMPROVing YOUR CREDIT SCORE 

Mission: Credit Confidence® Dashboard

Want to build or improve your credit or just keep a watch on your score? Your free Mission: Credit Confidence® Dashboard has all the tools and tips you need in one place. Check out the score simulator to see how certain actions can affect your score, get alerts and monthly credit score updates and more. 

Visit the Dashboard about the Mission Credit Confidence Dashboard

More Resources to Repair Your Credit

How To Maintain Credit

Even when you’re well on your way to reaching your credit goals, it helps to take an occasional pulse check. Use these three methods to stay on top of your credit health:

  • Pay Attention to Utilization

    The percentage of available credit you're using is one of the biggest factors impacting your credit score. In general, the lower the percentage the better for your score.

  • Get Credit Score Alerts

    Keep on top of changes to your credit score by setting up alerts in the Mission: Credit Confidence Dashboard. You'll get an email any time your score changes significantly.

  • Monitor Your Progress

    Get into the habit of checking your full credit reports periodically for potential areas of improvement, as well as for any discrepancies that may indicate fraud or an error in your report.

Find Where Your Credit Stands

Monitoring your credit and keeping track of your spending 

Money Management with My MakingCents®

Wherever you are in your credit journey, My MakingCents can help you get a better sense of your overall financial health. Track spending, create a budget, monitor credit, view all accounts and investments (even those at other banks and credit unions)—for free.

Manage Your Money with My MakingCents

More Resources to Maintain Your Credit

Still need help? 

Free Personal Finance Counseling

Connect with our personal finance counselors for free guidance tailored to your needs on achieving your money goals. Get help setting up a budget, building savings and taking control of your finances.

Talk to a Proand connect with a Personal Finance Counselor

Disclosures

The credit score and report you will receive through Mission: Credit Confidence® Dashboard is a TransUnion® credit report with a TransUnion® Vantage 3 Score.