Teen Guide To Building Credit Deonte cox

What is credit? Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.Why is it important? Your credit is important because your history determines what loans you will qualify for and the interest rate you will pay. Lenders get your credit history by obtaining your credit score. You'll most likely need to borrow funds from a lender.

What is a credit score? Credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of the person. ... Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. What do the numbers mean and how do they translate into ratings? What numbers mean in credit is how good your credit is to how bad it is. Bad Credit: below 600 Poor Credit: 600-649,Fair Credit: 650-699, Good Credit: 700-749 and Excellent Credit: 750 or more.

What is a credit report? Credit report is a detailed report of an individual's credit history. Credit bureaus collect information and create credit reports based on that information, and lenders use the reports along with other details to determine loan applicants' credit worthiness. Who is involved in producing it? Credit bureaus and lenders.

What factors make up your credit score? Some factors more heavily, such as payment history and debt owed. Payment history which is 35% Your account payment information, including any delinquencies and public records.

Build and maintain excellent credit?

Keep track of the checks you've written, debit and credit card transactions, and ATM card usage. Review your monthly statements when they arrive, and report any possible discrepancies immediately. Your available credit is how much credit you have left on a line of credit or credit card it is your credit limit minus your outstanding balance. Be careful to keep your spending below this amount.

Keep at least a 15% cushion of available credit in case of emergency or better yet, keep an emergency savings fund of three to six months living expenses in a liquid interest-earning account. Always pay at least your minimum monthly payment on time every month. By paying more than the minimum or better yet the full balance each month.

Timely payment is one of the best ways to establish yourself as a good credit risk to future lenders.Put all your bills in one place so you don't lose them or forget about them. Keep a list of the bills you have due, and if it will make it easier for you to remember to pay them, make them due on the same day each month.Using automatic loan payments from your checking account is a simple, convenient way to regularly make your payments.Contact your lenders immediately if you fall behind on your payments. Most creditors are willing to set up alternative payment options, especially if you inform them right away of your situation.

Credits:

Created with images by DorteF - "Credit" • Tax Credits - "Credit Card" • cafecredit - "Credit Score - Blue" • cafecredit - "Check Credit Report" • frankieleon - "rainbow of credit" • City of Boston Archives - "Unfinished Prudential Tower"

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