Workshop Two

📘 What You’ll Learn

What is Credit?
Credit means borrowing money with a promise to repay it later—**with interest**. It's not free money. When you use credit, you're taking on **debt**. Managing credit well means managing your debt responsibly.

1. What Is a Credit Score?

A credit score is a 3-digit number (300–850) that shows how responsible you are with debt. The higher the number, the better your chances of getting approved for credit, loans, or even housing.

• Excellent: 750–850
• Good: 700–749
• Fair: 650–699
• Poor: 600–649
• Bad: Below 600

2. What Makes Up a Credit Score?

• Payment History (35%) – Do you pay bills on time?
• Credit Utilization (30%) – Are you using too much of your available credit?
• Length of Credit History (15%) – How long you’ve had credit.
• New Credit (10%) – Have you applied for many accounts recently?
• Credit Mix (10%) – Do you have a mix of credit cards, loans, etc.?

3. Good vs. Bad Credit

Good credit means lower interest rates, loan approvals, better chances at getting jobs and rentals.
Bad credit means higher interest, denial of loans, and limited access to opportunities.

4. How to Build Good Credit

• ✅ Pay bills on time, every time.
• ✅ Keep balances low (under 30% of your limit).
• ✅ Don’t close your oldest accounts.
• ✅ Avoid applying for too many cards.
• ✅ Monitor your credit report for errors each year.