Before you get a credit card, you should have a basic understanding of credit and why it’s important.

What is Credit?

Credit is the ability to borrow money or access goods/services with the understanding that you’ll pay later. Your credit is your reputation as a borrower, it determines how likely you are to repay your debt.

Lenders, banks, merchants, and service providers (aka creditors) grant credit based on their confidence you can be trusted to pay back what you borrowed.

Why is Credit Important?

Good credit is necessary and important if you plan to borrow money for major purchases, such as a car or a home. You’ll need to prove to lenders that you can handle your financial obligations.

Click here to read more about The Five C’s of Credit and for more on Borrowing Basics click here.

Once you have the basics down, set yourself up for success by understanding these five things BEFORE getting a credit card.

1. Understand Your Credit Score

2. Check Interest Rates and Fees in Advance (Tip: avoid fees, interest, and late payments if possible)

3. Understand Your Credit Limit (Tip: avoid using your full limit)

4. Familiarize Yourself with the Repayment Terms (Tip: aim to pay more than the minimum balance each month)

5. Know how to navigate credit card fraud in the event you are a victim

Looking for more credit resources? Click here to read tips on building your credit.