Credit score? 20 characters?

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I’m 15, and I know nothing of a credit score. What is a credit score? How do you get a credit score? How do you avoid getting a bad credit score? How to you get a good one? What does a credit score do, exactly? Why is it important? Please tell me everything you know about it, as I hate not knowing and will have to know very soon.

Also, what numbers are good to have, what are bad, and what are neutral?

Thank you!

2 Comments
  1. Reply
    Beverly S
    July 21, 2011 at 2:28 am

    You have asked a great question- and it is good for you to know now at 15. First of all you know I’m sure that you can’t get credit till you are 18. A credit score is a # between 300 – 850. The higher the # the better the score. You get a high # by paying bills on time & not charging too much on the credit limits. It is a lot easier to reduce your score than to increase it. The reason your score is important is that the higher your score is the easier it is to buy a home/car or to get a credit card. You also get better rates the higher the score. You can buy a home with a 620 but really should strive for over 700 which is considered good.

  2. Reply
    Stephanie C
    July 21, 2011 at 3:22 am

    Wow, that’s a lot of questions at once! What you’ve asked is enough to write a whole book about – in fact, there are whole books just covering the questions you asked. But I’ll try and give you quick answers for each one.

    What is a credit score?
    A credit score is like the Grade Point Average you get in school. It’s a number that tells banks and other money lenders how responsible you are with money.

    How do you get a credit score?
    Whenever you borrow money, the bank or lender you borrowed the money will report how responsible you are to a Credit Reporting Agency. There are three of these (TransUnion, Equifax, and Experian). The bank can report your information to one of them, two of them, or all of them – it’s the bank’s choice. The bank will tell them how much you borrowed, and if you’re paying it back on time. The bank will report it to them about once a month.

    How to you avoid getting a bad credit score?
    There are several ways, but the biggest and most important is just to pay your bills on time! Never miss a payment or make a payment late, and your credit score will stay healthy. Also, if you get a credit card, don’t max it out. A maxed out credit card will bring your score down, even if you pay it on time. Only use a maximum of 30% of the “credit line” they give you.

    What does a credit score do, exactly? (And why is it important?)
    Sadly, your credit score is used be a lot of people to see how responsible you are. Banks and other lenders will check your credit score before deciding to loan you money, so you might need a good credit score to get a car loan or to buy a house. But landlords can also check your credit score, so you may need a good one to rent an apartment. Employers can also check your credit score, so you might need a good one to get a job! (But don’t worry yet, no employers expect a teen to have a credit score in order to get a job, it just might be more important when you’re in your 20s.) Also, insurance companies can check your credit score (in some states) to see how much to charge you for things like car insurance!

    What numbers are good to have, what are bad, and what are neutral?
    Credit scores range from 300-850. So the lowest you can have is 300, and the highest is 850. Anything above 700/750 is considered very good. Anything above 600 is okay, and anything below 580 is bad.

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