What is Credit Score / FICO Score? A Simple Explanation for Kids, Teens and Beginners

What is Credit Score or FICO Score? Easy Peasy Finance for Kids and Beginners

Introduction to FICO Score / Credit Score for Kids and Teens

This video explains the concept of credit score in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about FICO score, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Credit Score or FICO Score - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

What is Credit Score?

A credit score is a number that indicates your creditworthiness.

The most commonly used type of credit score is a FICO Score, which was developed by the Fair Isaac Corporation. It gives you a score between 300 and 850.

Who determines my credit score?

The three credit bureaus – Equifax, Experian, and TransUnion – usually calculate your credit score.

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How is a credit score calculated?

FICO Score or Credit Score for Kids Teens and Beginners - Calculation
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Your credit score is calculated based on the information contained in your credit report, like whether you make the payments on time, how much of the available credit limit you are using, etc.

Each credit bureau has a slightly different formula to calculate credit scores, so your credit scores from different credit bureaus can vary a little.

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Why is credit score important?

When you apply for a loan or a credit card, the bank or financial institution usually checks your credit score.

Your credit score can decide whether you get the loan or not, and at what rate. A good credit score gives the lender confidence that you would pay them back on time, and therefore helps you get credit cards and loans at a lower rate.

What is considered a good credit score?

Credit Score or FICO Score for Kids Teens and Beginners - What is a Good Credit Score
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Generally speaking, a credit score of 700 or more is considered good, and a credit score of 800 or more is considered excellent.

The average credit score in the United States is in the high 600’s (update: the average rose to 710 in 2020).

Can I do anything to increase my credit score?

It’s definitely possible to improve your credit score, and I’m glad you want to.

But how that’s done is a topic for another time…

Video Featured in the Below Financial Literacy Course for Kids & Teens

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Podcast: What is Credit Score / FICO Score

Credit Score
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