A Teens Guide to Good Credit By misha fry

When dealing with Credit, there are many different factors that can help to determine your eligibility, or whether a bank should trust you with a loan. However, to fully understand Credit, you have to know what it is and what it's for.

According to Experian.com, "Credit is borrowed money that you can use to purchase goods and services when you need them." Credit is very useful and can help you purchase necessities like a Car or House.

One of the First things that banks look at when considering you, Is your credit score. A credit score is a numerical representation of Your credit history, and your ability to pay loans and payments ON TIME.

FICO Scored Range From 350-850. You are much more likely to get a loan if you are in the GREEN zone rather than the YELLOW or ORANGE Zones.

According to FICO, Credit scores are calculated with these weights in mind:35% payment history, 30% amount owed, 15% length of history, 10% new credit, 10% types of credit used. This is why every decision having to do with credit that you make, is very important. Whether it be a Mortgage, Car Payment, or personal loan, make sure you keep track of your credit. To keep up with these deciding factors, you can access your Once-per-year credit report from the major Bureaus: Equifax, Transunion and Experian.

You may be wondering what exactly a Credit report is. According to Myfico.com, "Your credit report contains your credit history as reported to the credit reporting agency by lenders who have extended credit to you. The information in your credit report is also used to generate credit scores such as your FICO® Scores." A credit report can be very useful when preparing to apply for a loan.

A common problem that teens face, is that they do not know how to establish good credit at a young age. It's true, without a credit card it can be difficult to build credit, but not impossible. If you get a checking account as a teenager, and stick with the same bank, you are more likely to successfully apply for a credit Card. Staying with a bank can generate trust between you and the lender, hich makes it much easier to get loans, etc.

The lack of credit history in young adults and teens can make it hard to shop around for car loans, mortgages and even Finding an apartment to rent. However, closely following the guidelines for good credit, keeping track of your payments and debts, and checking Your credit score can get you started on the road to good Credit.

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