Credit Basics

Mar 2024 | Featured, Financial Education

Did you know March 1st kicks off National Credit Education Month? There’s no better time to learn the ins and outs of your Credit score! Whether you’re credit savvy or starting from scratch, keep an eye out for our #FinancialEdFriday’s for different tips, tricks, and information with everything credit related.

To kick off National Credit Education Month, we are starting at the very beginning, with the history of Credit.


History of Credit

1520 – The term “credit” was first used to describe loan reliability in 14th century London by bankers and financial experts to describe loan reliability.

1968 – Consumer Credit Protection Act, or CCPA, was created to protect consumers from banks, credit card companies’ and other lenders from unethical credit practices. It involves several laws, including protecting consumers from discrimination.

1989 – Fair, Isaac, and Company (or FICO) were chosen to help set up an industry-standard credit score. The FICO score made a consistent credit-scoring algorithm that is still widely used today.

2009 – Credit C.A.R.D. Act was passed in 2009. This act required credit card companies to be clearer in communications to consumers and lessening the “gotcha” fees.


Now let’s talk about what your credit score is, and what it really means.

Your credit score rates your perceived ability to fulfill a financial commitment. Essentially, it is a number showing your “creditworthiness” or how likely you are to make a payment, bill, etc. on time.

Your credit isn’t decided by one bureau, but three. The main bureaus that collect data on your financial behavior are Experian, Equifax and TransUnion.

Some factors these bureaus use to decide your credit score include payment history, amount owed, account length, account types, credit limit available and new credit.

All credit scores fall between 300 and 850. The higher the number, the better your credit history is. You will start at 300 if you have no credit history, not 0. Generally, a score of 670 or higher is considered good.



How is it used?

Your score is used by various institutions, including lenders, landlords, and employers, to gage how well you handle your finances. Good credit scores can be used to get better rates on loans, insurance premiums, even apartments.


How do I build credit?

The most important thing to recognize is that building credit takes time. It doesn’t happen overnight, and consistency is key. If you keep a credit card and pay on time consistently each month, you’ll be on the right track.

You can build credit in a variety of ways.

  • Secured credit cards: A credit card with a cash deposit when opening the card – typically your credit limit.
  • Credit Cards: Using a credit card will help build credit, when done correctly. Look for a card with no annual fee or a low APR. Be sure not to run the balance too high. A good rule of thumb is to not exceed 30% of your credit limit.
  • Authorized user on credit cards: This is ideal for parents who want to help children build credit. All transactions would be one balance, where the account owner manages payments, but the payment history record is added to both users reports.
  • Bill payments: Some credit agencies allow you to add your cell phone and utility bill payments to your credit reports. This shows your ability to pay for usage each month.
  • Credit builder loans: The amount borrowed isn’t given to you, but rather the credit union or bank holds it in a savings account while you make repayments. When you repay the loan, you get the money back. This is a great way to build savings and credit in one go.

AAGCU offers credit builder loans to help you in your financial journey. Whether you are looking to set up and build credit, or repair and improve your score, our loan department can help you customize a plan that’s right for you.

Email the loan department at or call 206-824-9800 (option 1 for loans) to get the conversation started.

Keep an eye out for more #FinancialEdFriday’s throughout March!


If you have any questions, feel free to contact us at (206) 824-9800 or by email at

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