Understanding Your Credit

What is your credit, and why does it matter?

When people talk about your credit, they mean your credit history. Your credit history describes how you use money. For example:

  • What’s your credit score ?
  • How many credit cards do you have?
  • How many loans do you have?
  • How you pay your bills on time?

How you handled your money and bills in the past will help lenders decide if they want to do business with you. Your credit history also helps them determine what interest rate to charge you.

If they see that you always pay your bills on time and never take on more debt than you can pay back, they will generally feel more confident doing business with you.
If they see that you are late on your payments or owe more on credit cards or loans than you can repay, they might not trust that you will pay them back.

Who cares about your credit history?

Lenders, landlords, insurance companies, and potential employers are a few who might look at your credit history. Your credit history can make a big difference when you:

  • Apply for a home loan or credit card
  • Look for a job
  • Try to rent an apartment
  • Try to buy or lease a car
  • Try to get rental or home insurance

Because these lenders, landlords, and others care how you handle your bills and other financial decisions, you might want to care about your credit, too.

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