Money Smart Teens

Unit 2: Build a Credit History 

Building a Credit History

While you’re still in school, it can be tough to establish credit.  But you need to build a credit history to get an apartment or a car for college.  A credit history tracks your success in managing money responsibly and provides a record of your personal transactions. 

Who looks at your credit history?  When you apply to rent an apartment or buy a cell phone, someone will review your credit report.  Also, employers will often look at your credit report during the hiring process. 

Building a Good Credit History

  • Open a savings or checking account at your credit union and keep your accounts in good standing.
  • Always pay your bills on time.
  • Apply for a credit card and always pay more than the minimum monthly payment.
  • Keep a low balance on your credit card or pay off the card every month.
  • Establish a consistent work history.  

Download PDF: Test Your Credit Knowledge

Choosing a Credit Card

Using a credit card comes with a price.  The biggest part of that price is usually the interest rate.  Advertisers like to focus on the size of the monthly payment—“Buy it now for only $29 a month”!  But that doesn’t tell you what you’ll really pay for the item. 

Here are a few costs you should be aware of: 

  • Annual Fee.  Card companies often charge a yearly fee for the privilege of using credit.
  • Credit Limit.  The maximum amount of credit a lender will extend to a customer.
  • Over-The-Limit-Fee. For credit cards, there are fees for spending more than your credit limit. 
  • Late Fee.  For all types of credit, a penalty for making a payment after the due date.  
  • Annual Percentage Rate.  The cost of the loan per year as a percentage of the amount borrowed.
  • Monthly Minimum Payment.  Minimum amount that a consumer is required to pay in order to keep the account in good standing. If the minimum payment is not made, late payment penalties are due.
  • Loan Term.  The length of time you have to pay off the loan.  The longer the loan term, the lower your monthly payment.  But the cost of using the credit increases because you’re paying interest over a longer period of time. 
  • Finance Charge. The dollar amount or cost of using credit to maintain a balance.

Download PDF: Shopping For Credit

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