What Is Credit Anyway?

Credit is a type of agreement between a borrower and a lender.

Typically, the borrower receives merchandise, money or services for little or no money up-front. The borrower promises to pay an agreed-upon amount of money within an agreed-upon amount of time.

The lender is the person or company providing the merchandise, money or services to the borrower. Usually, the lender charges the borrower a fee (interest) for allowing the borrower to pay for the merchandise, money or services later.

To help decide whether it's worth it to grant credit to the borrower (in other words, their creditworthiness), the lender will review the applicant's credit history to see if and how they've handled credit in the past. During this review, the lender will estimate how likely it is the borrower will fail to pay back the agreed-upon amount by the agreed-upon time.

How Can Credit Help Me?


Gain a clearer understanding of your credit history to: (1) manage your credit health and (2) detect signs of suspicious credit activity to investigate


Make informed financial decisions to improve your credit health, which in turn can improve the quantity and quality of your insurance, loan and credit options.


Guard against identity theft and financial fraud with monitoring tools.


Use credit management tools and resources to help achieve your financial goals.

What Can I Do? 7 Key Credit Tips

1. Get in the know

The more you know about how credit works, the better you can avoid common credit mistakes.

2. Improve your credit behaviour

Once you've learned a little bit about credit, you'll know more about good habits-paying your bills on time, not applying for too much credit within a short period of time, and many others.

3. Get the facts

Anytime you're applying for credit, you should understand all the terms and feel comfortable before signing on the dotted line. Read the fine print and ask questions-make sure you know what your rights and responsibilities are.

4. Dispute inaccuracies

If you see anything that looks inaccurate when you're reviewing your Consumer Disclosure, you can file a dispute. After an investigation, if the information you're disputing is found to have been inaccurate, that information will be appropriately modified or removed from your Consumer Disclosure.

5. Safeguard your personal information

Take precautions with your personal information. For example, choose strong online passwords and don't provide government identification without verifying who is asking and why. If a thief were to get a hold of your sensitive information, they could significantly damage your credit.

6. Monitor your credit

Follow up by monitoring your credit

7. Build your credit history

You build your credit history and items are added to your credit report, you'll want to keep track of changes. Credit monitoring is a service that makes it easier for you to do so.

What Goes Into My Credit Score? 5 Key Factors

1. Payment History

A good record of on-time payments will help boost your credit health.
Negative credit information, such as collections, bankruptcies and judgments can harm your credit

2. Outstanding Debt

How much do you owe?
Will it be seen as more than you can successfully pay back?

3. Credit Account History

An established credit history makes you a less risky borrower.
Think twice before closing old accounts, especially before applying for a loan.

4. Recent Inquiries

When a company checks your credit for lending purposes, it posts a hard inquiry to your credit file.
Apply for new credit in moderation because too many hard inquiries made over too short of a time period is seen as a sign you are a credit risk.

5. Types Of Credit

A healthy credit profile has a balanced mix of credit accounts and loans.
Creditors want to see that you are able to successfully manage different types of credit.