Credit is the right of a consumer to get products or services before the payment is due and it based on the trust the company gives the customer to make sure the payment is made on time.
Credit is very significant because it is important in the home buying process and your credit history determines what loans you qualify for and the interest rate you will pay.
A credit score is a numbered score you acquire from a credit company. You can build you credit score in many ways.
The credit score is on a scale 300-850. Having a higher credit score is good because that means you qualify for more loan capacity and a lower monthly payment.
A credit report is a detailed report of a customers credit history.
Who creates a credit report? The lenders or agency who has given the credit to you.
1. Payment history, how often you make your payments and how much you pay in allotted time. 2. Credit utilization, how you use the credit you were given. 3. Length of credit history, how long you have had a good credit. 4. New credit, if you are new to credit then it will be lower. Last but not least 5. credit mix, which is a vague category but relies on everything relating credit.
A teen like you can establish good credit score by co-signing a loan or debit card with a parent or guardian, check your credit regularly, or get a credit card with a small credit limit. These are a few simple ways to get good credit.