CREDIT & ITS IMPORTANCE: Credit is the ability to buy items and services before payment, based on the trust that the payment will be made in the future. Good credit signifies that your financial situation is stable and shows reliability and responsibility.
CREDIT SCORE & RATING: Credit score is a number given to a person that indicates to lenders their capacity to repay a loan. It ranges from 300-850, 850 being the highest score one can achieve. The higher the number the more likely you are to get approved for credit and get the lower interest rates, which means you'll pay less over time.
CREDIT REPORT: A credit report is a report that shows someone's financial history, specifically on their ability to repay borrowed money. One's credit bureau keeps a database and tracks their financial information and credit. Negative information, like late payments, stays on one's credit report for seven years.
WHAT MAKES UP CREDIT SCORE?: 1. Character: reputation, employment, payment history. 2. Capital: cash and reserved savings. 3. Capacity: the ability to make payments. 4. Collateral: things being used to secure the loan. 5. Conditions: state of the economy and overall risk.
TEENS & CREDIT: Teens can either become an authorized user on their parents credit card account or get their own! Teens should only use credit for small purchases. That will make it easy to pay all the bills on time and begin to establish good credit. Don't apply for too much credit in a short period of time because that can make the score fall.