High school and college bring about some very new concepts. As your independence grows, so do your responsibilities. When I started driving I was introduced to this thing called credit. I bought my first car with my parent as a co-signer. My parents helped me get a credit card at a gas station chain so that I could put gas in the car without having to worry about having cash.

When I went to college this exploded. Suddenly I had people stopping me all the time offering free stuff just for signing up for a credit card. Little did my peers and I know the trouble this would get us in.

student holding credit card and smart phone

Here are five things you should know about the money kind of credit, not the school class kind of credit.

Credit Score Credit Report

You have a credit report that includes personal items, like your Social Security Number, and affecting elements like loans and bank balances. The reporting agencies use this information to give you a score from 300 to 850. Being in the 650-750 range is considered good, over 800 is excellent.

Five things go into calculating your score, these are things you really need to be mindful of as you spend money. More than 60% of your score is your payment history and the amount you owe. The length of your history, the types of credit, and the number of new inquiries will make up the other third of your score.

You have multiple scores, and they are not the same

Since the Olympics just came to a close let me use a sports analogy. Many people think that their score is a black and white thing, like did the puck cross the line or not. It’s not that way, and it is very important that you understand that each agency can give you a different number. It’s more like judging figure skating, each judge sees you do the spin but one scores you a 9 and the other a 9.5.

I have had my score differ as much as 25 points, and I found some people who said they have a 50-point spread. Any significant difference between scores is a sign that something is wrong and you’ll want to look at your report to see why your score is different.

It’s a very important number

No exaggeration here, your life will be dramatically affected by your credit score. Car and home loans are well-known places where a higher score can mean lower interest rates, thus lower payments. But if you need a private student loan, you could be denied because of your score. Some employers check credit scores and I know people who have been denied jobs because of their score. There are even some people who will not marry you unless your credit score is high enough.

It’s like a roller coaster

Not because it’s a fun ride, quite the opposite. Your score will go down very quickly but getting it up takes a lot more time and energy. Making mistakes early in life can be the hardest to fix because you don’t have a long history to provide a safety net. Set a budget and stick to it. Don’t carry a balance on your credit card. Make payments on time every time. Finally, check your score regularly or use a tool like Mint that estimates your score.

You can check your score

If you don’t know already, you can get one free credit report from each reporting agency using annualcreditreport.com. This should include your score. As I mentioned, some sites like Mint will give you an estimate. I also learned recently that my bank will give me my score once a month if I ask for it. While too many requests for your report will bring down your score, these requests should not affect your score.


I know this hasn’t been the most fun read, but I hope you found some helpful information. If I can give you one parting tip it would be to do the right thing right now. I can’t stress enough the importance of being smart when it comes to loans and credit while you are young.