WHAT IS CREDIT

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Your Credit Score Is Important

What Is Credit
Credit is a tool that lenders use to determine whether you are at risk to borrow money. It shows lenders how you pay your bills. Similarly, to doing homework or taking a test a school. If you do all your homework and study, then you are likely to have a good grade on your report card. You credit history works the same way.

What is A Credit Report
There are three credit agencies that most creditors or banks report your credit history. Experian, Equifax, and Transunion are private companies that keep your payment history and other data about a consumer. The credit report is detailed with the following information below:

Payment history is 35% of your score.
Length of credit history is 15% of your score.
Amounts owed is 30% of your score.
New credit is 10% of your score.
Types of credit 10% of your score.

Why Do You Need To Understand Credit
Consumers need to understand credit because it determines whether or not they get approved or denied for a loan. It also determines how much money the banks or lenders will charge you for the loan.

How Do I Know What My Credit Score Is?
Your credit score is a number that ranges from 350-850. Each lender may have calculation depending on the method and information that is supplied to the Credit Bureau. You can order your score at Experian at 1-800-397-3742, Equifax 1-800-685-1111, and Transunion at 1-800-916-8800. Every year, you can get a free copy of your credit report, but you will have to pay for the credit score.

When Will I Have A Credit Score
At age 18, consumers should start applying for credit to build their score up. Most likely when you start, your score will probably be around 600. This is because you have no credit. Once you start college, you will probably start to receive credit card offers. Never apply for credit if you do not have a job to start paying your bills back. This is one of the biggest problems when students go of to college. They apply for credit and don’t have the money to pay the bill back. This could ruin your credit an impact your credit file for seven years.

Written by: Regina Littles

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photo: Wikipedia