In general, the sooner you start to have money conversations with your kids, the best. And the good news is that the majority of American parents have these discussions: more than half, or 56%, according to Chase Slate. 2018 Credit Outlook Survey.
But most parents skip a key financial term, according to the survey: Only 32% of parents explained what a credit score is.
- Payment History (35%): Paying off your past debts, whether credit card or mortgage debt, is the most important factor, as it helps determine how you will handle your future payments . You want make consistent and on-time payments to improve your credit or maintain a good score.
- Amounts Due (30%): This category is credit usage, which is the ratio of the amount you spent on your credit card to the card limit. Ideally, you want to use less than 30 percent of your available credit.
- Length of credit history (15%): How long you’ve had an account open and the time since your last transaction also affects your score. New credit users may have a harder time getting a high score because there is less payment history data available.
- Credit Breakdown (10%): Your score takes into account the types of credit you use, such as credit cards, retail accounts, installment loans, and mortgages.
- New credit (10%): opening new credit cards, especially all at once, and if your history is not established, may count against you. Too many difficult requests, such as those that arise when you apply for an apartment or sign up for a new card, can affect your score, while informal requests, such as a background check, do not.
Besides the credit score, read other important information money concepts and habits to teach your kids.
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