What Even Is Credit (and Why It Matters)?

Introduction

When I first got to the U.S. for grad school, my classmates and others often talked about credit, credit scores, and credit cards. I was utterly clueless about the credit system and how it worked. I mean, I was familiar with credit cards but that was the extent of my knowledge. So, yes, with what I know now, clueless!

If you’ve been in the U.S. for any amount of time, chances are that you have already bumped into this mysterious thing called credit. Maybe your landlord mentioned it or you already applied for a credit card. Or maybe you have overheard people debate whether 750 is “good enough.” But what exactly is credit? Why does it matter so much? And what do you, as an international, actually need to know?

Here’s your crash course.

What Is Credit, Really?

At its core, credit = trust.

It’s the system banks, landlords, and companies in the U.S. use to decide if they can trust you to pay them back. This trust is measured as a three-digit number called a credit score.

Your score ranges from 300–850 (for whatever reasons, they just skipped all of 0-299, but not my cup of tea). The higher the number, the more trustworthy you look to lenders. Most poeple aim for “good” (around 700 or higher), but the truth is, even getting on the scoreboard is a big first step if you’re new. 

The number itself comes from how you’ve handled borrowed money in the past - things like credit cards, loans, or payments. If you’re paying bills on time and keeping balances low, your score climbs. Miss payments or take on too much debt, and it drops.

Why Does Credit Matter So Much?

Here’s the thing: your credit score isn’t just about loans or credit cards. It sneaks into a surprising number of areas in everyday life.

- Apartments: Landlords often check your credit before renting. No score? They might ask for a bigger security deposit or a co-signer. I had to use my aunt for this when I first arrived. ‍‍
- Phones: Want that shiny iPhone on a monthly plan? A good score makes it easier.
- Cars: Financing or leasing a car is tied to your credit. No history or a low score often means higher interest rates.
- Utilities: Sometimes even your electricity, internet, or gas provider will check your score before starting service.
- Jobs: In some industries (finance, government, security), employers may peek at your credit report as part of background checks.

In other words, credit is important and it follows you around like a nosy aunt. But unlike an aunt, it can actually save you money - thousands of dollars over time - if you treat this aunt well.

‍Credit Report vs. Credit Score

Just a quick clarification since these two terms often get mixed up. They’re not the same thing, though:

- Credit Report: your full financial history. Think: every credit card, loan, and payment record. It’s like a transcript of your “money behavior.”
- Credit Score: a three-digit number calculated from that report. Think of it as your GPA.

So, your report shows the details; your score sums it up into a quick judgment call. Lenders and credit card companies need an easy way to know if you’re a responsible borrower. 

What If You’re Brand New in the U.S.?

The reassuring news is that most internationals start with no credit history at all. That’s totally normal; you're alone.

I remember considering not needing to build my credit history. I felt building credit was only needed for purchasing things on credit; if I paid in full, there was no need for building credit. Little did I know credit is a nosy aunt that follows you around. And “no history” can sometimes look like “bad history” to lenders and landlords. That’s why it’s important to start building your credit as soon as you can and why I decided to start building credit. 

The good news is that anyone can build credit from scratch - you have to start somewhere, anyway. It’ll take some time and consistency, but it’s doable and it’s one of the smartest money moves you can make for your life in the U.S.

Wrapping Up

That’s the basics: credit is a trust score, it matters in more parts of life than you might expect, and while you might be starting from zero (actually 300), that’s not a problem.

We will follow this up with more practical stuff: how to actually start building credit when you’re brand new in the U.S. - without accidentally hurting your score before you’ve even finished your first semester or settled into your new job.

Stay tuned!