Credit scores and credit cards
Build credit on purpose, before you need to borrow anything.
The borrower is slave to the lender. Credit is a tool for convenience, not a way to buy things you cannot afford.
Proverbs 22:7
Five ingredients
A FICO score runs from 300 to 850 and is built from payment history (35%), how much of your available credit you use (30%), how long you have had credit (15%), new credit inquiries (10%) and the mix of credit types (10%). Notice what dominates: whether you pay on time and how much of your limit you use. Those two alone are 65% of the score.
Why a teenager should care
Landlords check credit before renting to you. Car insurers use it to price policies. Utilities may ask for a deposit if you have no history. Auto lenders use it for your interest rate. No credit history is not the same as good credit; it just means you pay more or get turned down. Starting early, with one small card, is the cheapest way to fix that.
Key terms
Credit utilization: The percentage of your available credit you are currently using.
Credit inquiry: A record that a lender checked your credit, which can briefly lower your score.
This week's money move
See your real credit picture
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Week 5 check
3 questions · no grade, just a gut check
1. Which two factors together make up 65% of a FICO score?
2. How do you avoid credit card interest entirely?
3. A secured credit card requires…