Can someone explain credit to me?

Question

Hi, I am fairly young. I am 20, and have just recently gotten a credit card, to build credit. I’m not really sure how it works though, I just pay my bill on time every month. Am I suppose to be checking my credit score, how would you even go about that? I initially got a credit card so I could build credit, to eventually be able to buy a car or house some day, and my boyfriend made me feel like it was an awful decision to get one, so I just want to make sure I’m doing everything right. Thank you 🙏
Also I would like to add that he acted like it was a bad idea for me to get one because he got one when he was younger and I guess didn’t pay it on time, so he messed his up, but I’m going to pay mine, and not spend that much, just pay it off. i usually just get food occasionally or gas, or maybe a little clothes with it every month. It’s just a college rewards account with Wells Fargo, and the limit is 600, but last month I spent 150 on it, and I probably won’t go over that.

Answer

Here’s a visual to help breakdown how your score is formed:

Paying on them is most important. Keeping your utilization under 30% of your limit is next. 
The other three are about how long you’ve had the card (the longer the better), what kind of credit it is (credit card versus auto loan versus real estate), and how many of those have been opened recently (within 2 years). 
The only thing missing from this visual is the amount of hard inquires. (You checking your own score through credit karma, credit sesame, creditwise, etc are only soft inquiries.) The more hard inquiries you have in a 2 year span, the more questions you’ll have about why you’ve applying for so much credit.

Answer

I’m not sure if it’s an American thing to “build credit” but I live in Australia and I never had a credit card or any debt in my life and I got a home loan fine and never even heard of a credit score till I saw an ad for it on tv 😂

Answer

Just use it for gas or a few groceries and pay it off every month in full.

Answer

Use it for things you already every month. Gas, groceries, etc. then pay it off before as soon as your bill comes. You don’t have to constantly check your credit because it will be a few months before it makes a big difference but you can always credit karma, it’s free. 
Don’t let him make you feel bad. It’s only a bad thing if you aren’t responsible with it.

Answer

You’re doing it right as long as you don’t go into credit card debt. Just watch the balance and make sure you can pay it off each month. As far as checking your credit score there’s several apps or websites you can use to check it. I use credit sesame and they let me check it once a month for free.

Answer

He is absolutely wrong. You are absolutely right. 
As long as you pay it off every month, that’s a smart move. 
You don’t really need to be checking your credit score unless you are going to make a big purchase (or renting a new place) that you will need good credit for.

Answer

In lieu of tracking your credit score, which you only really need to know if you’re trying to get a loan, you should be checking your credit reports from the 3 agencies. You are entitled to one free report from each every year. Annualcreditreport.com. I space them out, get one at a time, so I can see the reports 3 times in a year.

Answer

As long as you're paying it monthly, it was a good idea! Use credit karma to check it. Any time somebody checks your credit, except for on credit karma, your score will go down so my advice is to not apply for anything until it is good (600+), and not to get any extra things in your name unless you know for sure that you can pay it monthly.

Answer

You don’t need a credit card to build your credit but it will make it fester if you are good about paying it.  I recommend you pay it off every month not just what the minimum bill is.  You can bill you credit by having other bill in your name and paying them on time.  That said my husband has only ever had one credit card in his life and I had one for less than two months. We bought our house when he was 19 and I was 18.  It was in his name.  Before he could even get approved for a home load he had to get a credit card and have it for a year.  Now that was 16 years ago.  But he also had a phone bill and car insurance in his name.  But if you can show that you bill your bills on time than your credit will be building.   
I honestly have no idea what my score is but I never really needed it.

Can someone explain credit to me?

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