Basics of Credit

Understanding credit is the first step to building a strong financial future. Here are the essentials every beginner should know.

• What is a Credit Score? Your credit score is a number (300-850) that represents your creditworthiness. Lenders use it to decide if you qualify for loans, credit cards, and more.
• Why Credit Matters: Good credit can help you get better interest rates, higher credit limits, and even impact things like renting an apartment or getting a job.
• How to Build Credit: Pay your bills on time, keep your credit card balances low, avoid opening too many new accounts at once, and check your credit report regularly.
• What Affects Your Score? Payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).
• Tips for Beginners: Start with a secured card if needed, always pay at least the minimum, and do NOT spend what you don't have.
• Common Myths: Checking your own score won't hurt it, and you don't need to carry a balance to build credit.