Credit Lessons

Learn everything there is to know about credit!


Credit is the ability to obtain goods or services before payment, based on the trust that payment will be made in the future. The better your credit score is, the more money the banks will lend you because they know you'll pay it back with interest. In order to get credit, you must show your creditworthiness. The banks check your character, capital, and capacity before they give you a credit card because they want to know if you are reliable, have some kind of income, and if you spend wisely. The credit bureau collects info on consumers' credit and sells it. You should maintain a good credit history because they have all your information on how reliable and how smart you are with money. A person or organization that lends money is a lender. A lender may give a personal loan that can be used for anything.


  • Collateral is something pledged as security for repayment of a loan, to be forfeited in the event of default.
  • Character is the type of person you are. They look to see if you are reliable and are able to pay back the money you will owe. They also check if you have enough income to receive a credit card.
  • Credit Limit is the max amount of credit that a financial institution or lender will extend to for a particular line of credit.

Credit Cards: What you need to know

Common cards are:

  • Visa
  • MasterCard
  • Discover
  • AMEX

You can establish credit by getting store credit cards. Establishing credit now will allow you to use credit easily in the future. There is an annual fee that you have to pay and you also have to pay interest. There are fees for paying late and going over the limit. You have to control your expenses because it can result into a bad credit score and a lot of debt.


Don't get a credit card too soon. If you do, you have to be extremely careful with it because you don't want to get in debt. The result of having bad credit because of the expenses you had when you were younger is that you may not be able to get financed for a home or car. Having a good credit score can help buy you a lot of things because it shows that you are reliable with paying money back.