Credit Basics For Teens

These are just some basic credit building essentials to help you get started. They all work because I've tried them. Take your time and study further into each subject before jumping in.

How Credit Works

  If you plan on buying a car or a house one day you are going to need credit. Credit pretty much tells the history of your financial records. Your financial record are made up of your credit report. A credit report tell three things about you.1) who you're paying,2)when you're paying and 3) how long you've been paying. A good example is when I got my first cell phone. I went down to Cingular and signed a contract for a cell phone thinking I could pay the monthly payments and soon realized I couldn't. Once the bigger more important bill came in the cell phone bill kept getting pushed back. So the company graded me like this: 1)I was paying Cingular, a multimillion dollar industry. 2) I was paying on a monthly basis of 49.99 a month. 3) I paid on time for three months and then started paying late shortly thereafter. SO remember if you're going to build credit you need to watch your front page which includes 1) who you're paying,2)when you're paying and 3) how long you've been paying.

Things That May Hurt Your Credit and You Don't Even Know It

Checking your credit report, although it is important to stay updated on your credit report it could have a harming affect. if you go to credit counseling agency and they pull your report it will not effect your credit rating. This is known as a "soft pull" of your credit because it does not directly affect it. When you apply for a loan or a credit card this is known as a "hard pull" because it does effect your credit rating. So keep these types of pulls to a low. If a lender sees to many inquiries for a loan or credit card he will assume your being turned down and then think of you as a credit risk.

Major Leagues

The three major credit companies are: Eqifax, Experian and TransUnion. They pretty much all judge you the same. The difference is that different  credit card companies and lenders report to one of these agencies. So if you have a Citi Bank Student Credit Card they might report to TransUnion where as your Capital One Credit Card reports to Experian.
 

Important Parts Of An Application

The APR is very important, it tells how much you will pay for interest based on a year

This is how long you have to pay the bill. Exercise precaution if you only pay the minimum each month. That is a good way to get caught up and do the opposite of what your trying to do.
I highly recommend you read ALL print on the application. They do get tricky sometimes so don't be afraid to ask if you get stuck on something you don't understand.