Credit Cards and Credit Scores
Understand borrowed money before using credit.
- Explain why credit is borrowed money, not extra income.
- Understand how paying the full statement balance avoids most interest.
- Identify the main factors that affect a credit score.
Debit uses your existing money. Credit allows you to borrow and repay later. A primary credit-card holder generally must have reached the age of majority. Some issuers may allow younger authorized users.
Credit lets you borrow now and repay later, generally with interest if not paid in full.
Credit is not extra income
A credit purchase creates a balance. Interest may apply if the statement balance is not paid as required.
Paying only the minimum can greatly increase the total cost.
Credit scores
A credit report records credit use. Scores generally range from 300 to 900.
Payment history, debt, account history and applications may affect the score.
Carrying unnecessary debt does not build good credit.
Borrowed money you agree to repay, generally with interest if not paid in full.
A number, generally 300–900, that summarizes your credit report and affects future borrowing.
What generally happens if you pay your full statement balance on time?
| Debit | Credit | |
|---|---|---|
| Money source | Your own bank account | Borrowed from the card issuer |
| Repayment | Not applicable — you spend what you have | Required; interest may apply if not paid in full |
| Risk | Limited to your account balance | Balance can grow if only the minimum is paid |
| Age requirement | Available with most youth bank accounts | Primary holder generally must have reached the age of majority |
Put it into practice
0/3 done- Write down whose money is used for debit vs. credit.
- Note whether repayment is required.
- Note when interest can apply.
3 questions
Questions completed: 0 of 3
Official sources
In short
- Credit lets you borrow now and repay later, generally with interest if not paid in full.
- Paying only the minimum can greatly increase the total cost of a purchase.
- A credit score is affected by payment history, debt levels, account history, and applications.
- Carrying unnecessary debt does not build good credit — paying what you owe, on time, does.
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