A Teen's Guide to Building Credit By: Janai Wright

The Big Question: What Is Credit?

Basically, credit is when someone from a bank lets you borrow money then you pay it back in the future.

You have no money
You go to a bank
The bank gives you money
And you pay it off later

Why is credit important?

Let's say you want to buy a car or some other major purchase. You might want to use credit instead of using your paycheck or allowance. so, instead you borrow the money you need then and pay it back later so that you can make your purchase.

So now you want to know what a credit score is?

A credit score is a numerical representation of a person's credit history ranging from 350-850.

A credit rating is the actual words used for your credit history such as, Excellent, Good, Poor, etc.

But, what is a Credit Report?

A credit report is a detailed sheet of a person's credit history, which is collected by the credit bureaus

5 factors that make up a credit score

  • Payment History
  • Used Credit (Amount Owed)
  • Length of Credit History
  • New Credit
  • Type of Credit

The last question: how can someone like me start my own credit history?

To start you can open up an account with your parents and make sure your name is include on the account.

Now you know all about credit. Get ready to start your own.

Sources: Google, Investopedia.com, classroom.google.com, youtube.com

Credits:

Created with images by Sean MacEntee - "Credit Cards" • Jesse Michelsen - "Credit Karma Shades in action" • schuldnerhilfe - "trouser pockets empty jeans" • JeepersMedia - "Chase Bank" • TuRbO_J - "2015 Hyundai Sonata Premium: Australia's Auto Sales - January 2015:" • cafecredit - "Credit Score - Dictionary 1" • Sophieja23 - "woman question mark person"

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