Credit Cards, Credit Score and Identity Theft

Credit Cards

As a resident, you want to be able to focus on your credit right away. This will prepare you to meet financial goals such as owning a home after you become an attending physician. Credit cards have many positive financial aspects including the ability to use money for free for 30 days (depending on the terms of the card). Credit cards can also improve your credit score and help establish a positive credit history. Credit cards can also be helpful in emergencies. If used irresponsibly, credit cards will have a negative impact on your financial well-being. Signs to watch out for are:

  • Relying on credit cards to pay for the basics, such as food and utilities.
  • Continually responding to offers to transfer balances from one card to another.
  • Making only minimum monthly payments.
  • Maxing out your credit cards.

Identity Theft

As a resident, you will pay bills online, shop online to save time and even order food online because you are extremely busy. Identity theft costs victims billions of dollars per year and fraud scams continue to increase at a rapid pace. You can stay safe and avoid this situation by:

  • Being careful when connecting to public Wi-Fi.
  • Checking your credit report at least once a year.
  • Using safe and strong passwords for your accounts.
  • Recognizing secure websites and avoiding those that aren’t.
  • Watching closely for emails and attachments from imitators.

Credit Score

A good credit score is essential for a resident with financial goals. That score is an indicator of the creditworthiness of an individual. This score is important because it will directly affect your approval rate (for insurance, housing, utilities, and more) and your interest rate for loans. In most situations, the better your credit score, the less it will cost you to borrow.

During residency, focusing on the following items will improve your credit score:

  • Pay your bills on time.
  • Pay down your debt. Limit the amount of debt you put on credit cards (revolving lines of credit).
  • Don’t close accounts and limit opening new ones.

After watching and protecting your credit, it’s possible that you’ll have a better credit score than when you started residency which will help you to make purchases as an attending physician. Here’s a breakdown of how your credit score is determined:

A pie chart with different types of credit history

Good credit means you are more likely to get a loan approved. Beyond that, you’ll enjoy:

  • Better loan offers (rates, terms, and conditions).
  • Lower interest rates on credit cards.
  • Faster credit approvals.
  • Increased leasing and rental options.
  • Reduced security deposits.
  • Reduced premiums on auto, home, renter, and life insurance policies.

Being proactive about your credit is the way to begin making smart financial decisions that will give you a solid financial foundation for years to come.