What is a good credit score?

Understanding the credit system: A guide for middle school students

Imagine your friend wants to borrow your favorite video game. You’d probably think: Can I trust them to return it? Will they take care of it? If they’ve borrowed stuff before and returned it on time in good condition, you’ll probably say yes. If not, you might say no. That’s exactly how the credit system works in the real world, except instead of games, it’s money.

What is credit?

Credit is when someone lets you borrow money with the promise that you’ll pay it back later. It’s used for things like buying a car, going to college, or even getting a phone plan. You might not have the cash right away, so credit helps you get what you need now and pay over time. 

What is a credit score?

Your credit score is a number that shows how trustworthy you are with borrowing money. It’s kind of like a grade on your report card, but for money. It usually ranges from 300 to 850. The higher your score, the more likely banks or companies will trust you and offer better deals.

Here's a breakdown:

• 750–850: Excellent – You’re doing great.
• 700–749: Good – You’re doing well.
• 650–699: Fair – Not bad, but needs work.
• 600–649: Poor – You’re having trouble.
• Below 600: Bad – Lenders won’t trust you easily.

How is your credit score calculated?

It’s based on a few key things:

• Payment History (35%) – Do you pay your bills on time?
• Amounts Owed (30%) – How much do you owe compared to how much credit you have?
• Length of Credit History (15%) – How long have you been using credit?
• New Credit (10%) – Have you opened a lot of new credit accounts recently?
• Credit Mix (10%) – Do you have different types of credit (like a loan and a credit card)?

How to build credit

Even though middle schoolers aren’t using credit yet, it’s helpful to know how it works so you’re ready when the time comes. Here are smart ways to build good credit later:

• Get a credit card with a low limit when you're old enough (usually 18). Start small, like using it for gas or a phone bill, and pay it off every month.
• Always pay your bills on time. That includes phone plans, subscriptions, and anything else with regular payments.
• Don’t borrow more than you can pay back. Only spend what you know you can afford to repay.
• Keep old accounts open. The longer you’ve had credit, the better your score gets.
• Check your credit reports for mistakes. You can do this for free once a year to make sure everything looks right.

What hurts your credit?

Just like missing homework or being late to class affects your grades, certain things can hurt your credit:

• Missing payments: Paying late or not at all is one of the worst things for your credit.
• Maxing out your credit card: Using up all your available credit makes lenders nervous.
• Applying for too much credit at once: It looks like you’re desperate for money.
• Defaulting on loans: That means you stopped paying, and it can wreck your credit for years.

Why credit matters

Good credit helps you:

• Get approved for apartments, loans, and phones.
• Pay less in interest (extra money you pay when you borrow).
• Get better job offers – yes, some employers check credit!

Bad credit makes life harder. You may be denied for things you need, or you’ll have to pay a lot more in fees.

Final thoughts

Think of credit as your financial reputation. The way you treat money now, even with things like saving and budgeting, can help you make smart choices later. Start with good habits early, and by the time you need credit, you’ll be ready to use it wisely.