d) Recognizing Types of Credit

  • View and study the following video.

You need good credit, but what is credit? In order to improve your credit you need to know how credit works, what hurts it, and how you can manage it. Let’s look at what credit is, how it works, and where to find out more about it.
What is Credit? Credit is your reputation as a borrower. It tells others how likely you are to repay your loans. Credit is made up from information about your borrowing history. Most of the information comes from your credit reports.

What is a Credit Report?  A credit report contains information about your borrowing history. Lenders (and others) provide information that ends up on credit reports. They report how much you’ve borrowed, how you’ve repaid, and other details about your borrowing behavior.

  •     How to View Your Free Credit Reports
  •     How To Read And Understand Your Credit Report

When somebody wants a credit report, they request one from a credit reporting company - or "credit bureau".

What is a Credit Bureau? Credit reporting agencies collect - and then distribute - all of this information about you. They are information warehouses, and if they have erroneous information your credit can suffer.

  • Download and Complete the Handout "Types of Credit" as a matching exercise to build an awareness of the different types of credit available to consumers.