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  • Noble Credit Union

Credit: What is it & how do I build or improve it?

Updated: Nov 15, 2022

Borrowing money makes it possible to afford things that you couldn’t otherwise, but it’s important to understand what you’re signing up for to avoid falling into overwhelming debt. When you purchase something with credit, you are on the hook for that money, and most of the time you will have to pay back that original amount plus interest. Your credit score has a major impact on your ability to obtain a loan. Lenders use your credit score to determine how likely it is that you will repay the amount borrowed. Scores range from 300-850, with the average score in California, according to Equifax, being 709.



You can pull your credit report for FREE one time each year? Visit


Types of Credit

Credit Cards and other lines of credit are considered revolving credit, where you can borrow, pay off, and borrow again up to a predefined amount of money. If you cannot pay off the balance in full, then you will typically be required to pay a minimum amount each month, and interest will begin to accrue.

Auto loans, mortgages, and student loans are considered installment credit. You borrow a specific amount of money then pay it back in installments or monthly payments. Interest is automatically built into these payments.

For utilities, you use the service through open credit and then pay for what you used on your next bill. These types of bills don’t usually charge interest but will add fees if the amount isn’t paid on time or in full.



Principal... grace period... term... Credit phrases can be confusing. Here is a list and explanation of the most common words!


How to Build It?

It takes credit to get credit, and credit is crucial to buying a new home, finding a place to rent, or purchasing a car. If you’re just starting out, learn how to build your score from scratch or boost your current score.



Consistent and responsible credit use builds your credit history and shows potential lenders that you can borrow and pay back money responsibly.


How to Improve It?

If your credit score isn’t perfect and you’re not sure where to begin, take this 5-minute Banzai Coaching Session to learn How to Repair Your Credit and create an actionable list with steps to repair it.



If you pay your credit card bill in full and on time, borrowing that money costs you nothing.


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