With these rights come responsibilities, and consequences. Most young adults don't realize that missing a few payments or going over their credit limit can damage their credit. This can result in higher interest rates, being turned down for future loans, or even being denied a job or apartment rental.
You want your teens to be ready. Here are some points you'll want to discuss with them as they begin to assert their financial independence:
Basically, credit is where someone loans you money that you promise to pay back at a later date, under repayment terms to which you both agree.
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There is always the risk that someone won't pay back their loan.
Among the tools lenders use to assess your credit history are credit reports available from the three major credit bureaus:
Equifax, Experian and
You can either order reports from each of the bureaus directly for a small fee, or get one free credit report per bureau, per year at
Credit bureaus use information in someone's credit report to create a three-digit credit score — typically ranging between 300 and 850.
Good credit is something you have to earn by demonstrating sound financial habits.
If you are new to credit, it will take time to establish a strong credit history and earn a high credit score.
Failure to manage credit responsibly can have an adverse effect on your credit for years to come.
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