Credit Card Drama | Here’s What You Need to Know

Close up of credit cardsThat small piece of plastic can feel like a badge of adulthood. But we also heard the stories of people drowning in debt from misuse. If you’re considering a credit card for the first time, here’s what you need to know.

How to Qualify

Credit card companies want to know you’ll be able to pay back your balances, so you’ll need to match the specific credit card requirements, such as your current income and credit score. Shop around for different credit cards, particularly consider searching for college student credit cards. But remember, never rush out to apply for the first offer you see. Being denied a credit card can negatively impact your credit score, making it even harder to get approved. So do your research and find out what credit offer will give you the better odds for approval.

What’s My Credit Score And Why Should I Care

Credit scores are a point system that will fluctuate up and down based on the amount of debt you hold, your on-time payments, and more. Credit scores of 630-689 are considered average. A score below 629 is considered bad credit. These scores will influence how much you pay for insurance, your approval odds for an apartment, and even how much you have to pay for a security deposit.

So, what’s your credit score? Everyone is eligible for a free credit report by the three major reporting institutions via Federal law. You can get your report at

How Credit Cards Impact Your Score

Credit cards can boost or damage your credit score. Here’s how;

  1. When you apply for a credit card, the credit inquiry will cause your credit score to drop momentarily. This means you should never apply for numerous credit cards close together.
  2. When you have a line of credit, you have a debt to income ratio. Use less than 30% of your available credit and your credit score may actually go up! In fact, simply owning a credit card and not using it can be a simple way to increase your credit score.
  3. If you fall behind on your credit card payments, expect your credit score to take a huge hit.

What If I Have Bad Credit or No Credit?

When you’re young, it can be hard to build a history of responsible, on-time payments. As a result, your credit score will suffer, making it hard to get approved. However, there is a way to get that piece of plastic––secured credit cards. To get a secured credit card, you’ll need to put down a deposit of say, $200. This will provide you a credit card with a limit of $200. When you use the card, you’re actually borrowing from your own $200 and when you repay the balance, you’re returning a portion of the deposit. The payments get reported to the credit agency, so it builds a record of responsible credit card use! And yep, the deposit is fully refundable once you decide to graduate to an unsecured card.

How to Manage Your Money

Use your credit card as though it’s cash––As in, never spend money you don’t have and when you use your credit card, you’re spending money. By adhering to this simple practice, you’ll avoid falling into the trap of debt where interest accumulates and that $3 coffee takes you a year to pay off! One simple method to do this is to sign up for a money app, such as Mint.

You’ll also want to avoid those late fees and interest payments. Late fees happen when you miss a monthly payment and interest occurs when you fail to pay the entire statement balance. When your credit card bill arrives, it will give you a minimum payment due. If you pay the entire balance of your credit card, you won’t be charged any interest nor late fees! If you can’t afford to pay off the full balance, you’re spending money you don’t have.

The Take-Away

Credit cards offer great convenience and help you build your credit score. However, irresponsible use can land you in a heap of debt and bad credit. So if you feel you can manage the payments, complete your research by knowing your credit score, income, and budget restraints. With responsible use, you’ll be able to score those credit cards with the amazing cash-back offers.

By Thomas Guzowski, U of R Employee
Thomas Guzowski, U of R Employee Assistant Director of Marketing Thomas Guzowski, U of R Employee