Hi friends,
What is credit? How do I grow my credit? I’m not even sure what other important questions I should be asking.
My parents are immigrants and I’m also one. I moved to the U.S when I was 11. Unfortunately my parents didn’t have the chances that I had and they didn’t get much of an education. Sometimes I feel like I’ve had to navigate a lot of life in the US by myself (SATs, college applications, school loans, etc.) on top of helping my parents navigate it too. I’m a young adult now and I don’t have any guidance and would really like to start thinking about my future. I think credit is a good place to start. Any info/advice is welcome, I literally barely know much about the system. Thank you.
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Credit is ability to borrow money… credit cards, home mortgage loans, car loans, student loans, etc.
All those credit/loan accounts get reported to credit bureaus and compiles into credit reports, which are centralized repositories for borrower info that banks and other lenders can refer to when choosing to lend to you. They show all the accounts you have and had, whether you paid on time or were late paying (more than 30 days), any negative marks like bankruptcies or accounts charged off.
Credit scores are algorithm that parse various info about your credit history into a number from 300-850 that allows for quicker decision making in most cases. Rather than a loan officer having to pore through pages of reports and deciding what they consider more import and less important, a credit score is an instant number they can use to qualify you.
The score uses info like number of accounts, age of accounts (ie. length of credit history), types of different accounts, credit card utilization (balance relative to limit), any negative marks, recent HARD credit pulls (like when you apply for a loan, not just checking your own credit scores as that’s a soft pull).
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