10 frequently asked questions about credit

December 07, 2016




You know that having at least one credit card could be very useful, but what exactly is credit and how can you increase it?

More than something to use when you don’t have money (something you should never do if you can’t cancel the debt within a reasonable time), a credit card will help you in the important moments of your life, like buying your first car or even a house. So, what’s essential when applying for it? Good credit score and credit history.

Here are the 10 most frequently asked questions about credit cards, so you know where to start:

1.) What do I need to get a credit card?

You will need to submit your personal information, photo ID, social security and current income information. You can obtain more information and apply very easily here:


2.) Is there a minimum age to apply for a credit card?

  • In Puerto Rico, a minimum age of 21 years is required to independently request your credit card. However, individuals under the age of 21 can be added as authorized users to their parents’ cards. If you are a student between the ages of 18 and 20, the principal applicant must be your father, mother or tutor and you must be the co-applicant.

3.) How many credit cards should I have?

It all depends on who you ask. Some people will tell you, “None!” But credit cards are great for building your credit history and increasing your FICO score if you use them correctly. You can start with one and ask for the minimum ($500), only using up to a maximum of 30% of the credit line. For example, in the case of a $500 card, you should not maintain balances larger than $150.

Later on, when you’re used to keeping your card active with less than 30% use, you may consider taking out a second card with a “reward program” (usually points for airlines, hotels, etc.) and start using it the same way (with a maximum of 30% use).

4.) I don’t use my credit card, should I close it?

We have the wrong idea that closing or cancelling a credit card is positive for our credit when in fact, it’s the opposite. A portion of your credit score is calculated by the amount of credit you have available and are using, versus the credit you have available, unused. So if you have $10,000 in credit and $5,000 in debt, but you close a $2,000 card, your credit score is reduced by having $8,000 of available credit with that same $5,000 debt.

Likewise, the longer you own a credit card will have greater weight in increasing your score than new cards.

 5.) What things affect my credit negatively?

Making your payments late or forgetting to make a payment affects your credit. Similarly, withdrawing cash or “cash advance” from a credit card results in very high interest rates, which can be a problem for you when it comes to paying off the debt, because the balance can go up considerably in a short amount of time.

6.) What is the best way to pay off my student loan?

Consolidating and refinancing your student loan is a good way to reduce your interest and ensure that every payment you make goes to the current debt (the loan) rather than to interest. You should only refinance student loans that allow you a deduction on your interest rate.

7.) Every month I pay my credit card debt. Does this help me?

It depends. The trick is to know the date when the billing cycle of your card closes. If you cancel the debt before the billing cycle is completed, the credit card company can’t report balance on your side, and you don’t accrue credit. However, when the cycle closes and your bill is issued, that amount is reported and you can pay it immediately. This way you contribute to your good credit history, and at the same time, watch out for your financial health.

Another effective way to pay your debt is by making payments higher than the monthly minimum, as long as you have extra money. Contribute bonuses and extra cash to the debt and pay it off in less time.

8.) I have been told to transfer my debt to a card with 0% interest. Why?

Transferring your entire debt to a credit card with 0% interest can be of great help if you have the money to pay off that debt within the term that the card does not accrue interest. For example, you transferred $500 to a new credit card with 0% interest for one year. Is a year enough time to pay off those $500?

Make sure that after that promotion period the regular interest rate of the credit card is good for you.

9.) Is it important to read the legal fine print on credit cards applications?

We know… they can be terrifying. But read them! Find out the terms and conditions so you don’t get caught off guard.

10.) I have a ton of debt and my credit score is very bad. What can I do?

The most important thing is that you try to get a free financial consultation on how to pay off your debt and explore the possibility of a credit restoration program.

Do you want to know more about your options? Click here for more information about credit. Visit our section Banking 101, a guide for achieving your independence.