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Building a strong credit history
A public education campaign brought to you by MasterCard®
2Master Your Card A public education campaign brought to you by MasterCard®
Buying your first car, renting your first apartment, starting college,
beginning your first real job—master your credit early or your dream of getting ahead will be left behind.
3Master Your Card A public education campaign brought to you by MasterCard®
Asking the right people the right questions can help you be more
independent, not less. Don't be afraid to talk to them about money and get
some good advice.
4Master Your Card A public education campaign brought to you by MasterCard®
Understand what credit is, know how to make smart
money decisions and get set for the good life.
5Master Your Card A public education campaign brought to you by MasterCard®
Master Your Card is a public education program that helps
you get the most from your money through
prepaid, credit and debit cards.
MasterCard is a technology company that builds safe, smart and simple solutions for making payments
and purchases.
6Master Your Card A public education campaign brought to you by MasterCard®
Consumers have the money. Banks issue credit and hold
funds. Businesses have goods and services.
7Master Your Card A public education campaign brought to you by MasterCard®
8Master Your Card A public education campaign brought to you by MasterCard®
MasterCard provides the technological magic that
links them all together.
Credit basics
10Master Your Card A public education campaign brought to you by MasterCard®
Words you should know:
• Credit history: a record of your debt that includes your history of credit card and loan repayment and bill payments. Three major credit bureaus (Experian, TransUnion and Equifax) track your credit history and compile it into a credit report.
• Credit score: credit bureaus evaluate your credit history and assign you a credit score that gets used by lenders to decide whether to give you credit and on what terms.
• Annual percentage rate (APR): the interest rate charged on your credit card balance every month if you don't pay it off in full.
• Credit line/Credit limit: the amount of money that you can charge to a credit card.
• Minimum payment: the least amount of money you have to pay on your credit card each month.
11Master Your Card A public education campaign brought to you by MasterCard®
The first step in building your credit history is applying for a credit card. A credit card
is a payment card issued by a bank or other financial institution. Each time you use it,
you borrow “credit” (money) from the bank that gave you the card.
12Master Your Card A public education campaign brought to you by MasterCard®
Instead of applying for multiple cards, find banks or financial institutions that give
credit cards to first-timers. You may get several offers, but sign up for just one card to begin with. Don’t fall for gimmicks and
skip the free T-shirt.
13Master Your Card A public education campaign brought to you by MasterCard®
In order to qualify for a credit card, you must be at least 18. If you’re
under 21, you'll also need either a cosigner or proof of income.
14Master Your Card A public education campaign brought to you by MasterCard®
It may be difficult to get a credit card because you lack a credit history or have a lower income.
15Master Your Card A public education campaign brought to you by MasterCard®
It's easier to get a credit card when you have a job, establish a bank account and start building a credit history, even if it’s short.
Your credit,
your future
What’s a credit rating and why do I always hear people talking about it?
17Master Your Card A public education campaign brought to you by MasterCard®
18Master Your Card A public education campaign brought to you by MasterCard®
A credit rating or credit score is a rating that
lenders, banks, landlords and others use to evaluate
your financial strength.
19Master Your Card A public education campaign brought to you by MasterCard®
Credit scores change over time, ranging from
about 300 to more than 850.
300 850
20Master Your Card A public education campaign brought to you by MasterCard®
A number of thingsinfluence your credit score.
21Master Your Card A public education campaign brought to you by MasterCard®
10%New credit
10%Types of credit used
15%Credit history length
30%Amounts owed
35%Payment history
A number of thingsinfluence your credit score.
22Master Your Card A public education campaign brought to you by MasterCard®
EXC
ELLE
NT
740-850 Higher scores will save you money. The higher the score, the lower the interest rate you will pay.
GO
OD 620-740 Improve your score by paying your bills on time
and keeping your balances low.
POO
R 300-620 Financial institutions consider you a greater risk. You may not be approved for a loan at all.
23Master Your Card A public education campaign brought to you by MasterCard®
EXC
ELLE
NT
Higher score=lower ratesPO
OR Lower score=higher rates
as low as
7.9% as high as
28.9%
24Master Your Card A public education campaign brought to you by MasterCard®
EXC
ELLE
NT
Higher score=lower ratesPO
OR Lower score=higher rates
as low as
5.1% as high as
18.9%
25Master Your Card A public education campaign brought to you by MasterCard®
EXC
ELLE
NT
Higher score=lower ratesPO
OR Lower score=higher rates
as low as
3.9% as high as
9.5%
26Master Your Card A public education campaign brought to you by MasterCard®
Typical $160,000 loan with a 30-year fixed mortgage
Typical 5-year auto loan of $25,000
Credit card rates may vary due to different factors
Credit scores offer lenders an idea of how much risk you might pose
EXC
ELLE
NT
740-850 3.9%APPROXIMATE
5.1%APPROXIMATE
8.0%APPROXIMATE
Higher scores will save you money. The higher the score, the lower the interest rate
you will pay.
GO
OD 620-740 4.6%
APPROXIMATE
8.8%APPROXIMATE
13.1%APPROXIMATE
Improve your score by paying your bills on time and keeping your
balances low.
POO
R 300-620 9.1%APPROXIMATE
18.4%APPROXIMATE
24.4%APPROXIMATE
Financial institutions consider you a
greater risk. You may not be approved for
a loan at all.
Good credit opens doors
28Master Your Card A public education campaign brought to you by MasterCard®
Follow these simple rules for a high credit score and a low-stress
financial future.
29Master Your Card A public education campaign brought to you by MasterCard®
• Pay your bills on time.
• Pay off monthly balances in full.
• Know your credit limit and don’t go over it.
• Keep your monthly balance low.
• Pay off debt rather than move it around.
• Read the fine print to know about fees and how to avoid them.
• Use your phone to monitor your balance.
• Review your credit report regularly with free annual reports, and dispute any inaccuracies right away.
• Report lost or stolen cards right away.
• Take advantage of special products and tools.
• Set smart spending limits—you can tell the bank what your max limit should be.
Do
30Master Your Card A public education campaign brought to you by MasterCard®
Don’t• Don’t close unused credit cards.
• Don’t open multiple accounts in a short period of time.
• Don’t let someone else in the family open up a card in your name.
31Master Your Card A public education campaign brought to you by MasterCard®
But more than anything,
borrow only what you can
repay!
Thank you
To get the most value from electronic payments, visit www.masteryourcardUSA.org