Credit: Your Financial Report Card
By Rob Matthews

Have you ever asked your parents to borrow some money? If you think you have never asked them, you’re probably wrong. Perhaps you needed an advance on a paycheck, or you saw something in a store that you really wanted. Chances are, at some point in your life, you needed mom and dad to float you a loan. In the great world beyond high school, people borrow money as well. There are two main types of borrowed money: credit cards, and loans. Both of these are based on credit. They are just like mom and dad in that, they nail you when you miss a payment, but unlike mom and dad, they aren’t nearly as forgiving.

Financial institutions and credit card companies base if, and how much they loan you on your credit. Credit is, simply put, your financial report card. From a credit report, moneylenders can tell how good you are at making payments. The better you are, the more money they will lend you. Bad or no credit is the fastest way out of a loan meeting. This makes sense. Would you loan your hard-earned money to someone who couldn’t or wouldn’t pay it back? Absolutely not! You wouldn’t even consider it. You would want to at least get back what you loaned out. Financial institutions are the same way.

So, how does credit affect you? If you don’t have good credit, you don’t get loans. It’s as simple as that. What can you do now? You can get into good financial habits, like paying back your parents as soon as you can. Making good habits now will help later.