5.0 Lesson 4: Building Credit from Scratch

Do you think you would be more likely to lease an apartment or buy a house when you decide to live on your own? In either case, why is it important to have a good credit report?

Do you think your credit report is a good indicator for whether or not you're a good candidate for the things listed in the article? If so, explain why. If not, explain what other things you think should be considered.

How does a secured credit card benefit someone new to using credit while also reducing the risk taken by the card issuer?

Which of these individuals is likeliest to have the highest credit score? Explain your choice.

• James has one credit card he opened less than six months ago. He’s never missed a payment, always pays in full, and has $10,000 in savings, but limited credit history.

• Akhil has a history with credit cards and student loans, with only one missed payment in two years. He usually carries a balance and recently applied for three new credit cards to earn rewards.

• Cassandra is 22 and has opened one new credit card each year since she was 18, now holding five. She uses just two regularly, pays in full every month, and has never missed a payment.

• Jaycee is 28 and has had one credit card since she was 18, plus student loans and a car loan. She pays her card in full each month but often maxes it out and occasionally misses payments.

Complete the table below using data from the calculator.