Lesson 4: Banking & Credit

Banking & Credit Reference

Types of Bank Accounts

• Checking: for daily spending; comes with debit card; low/no interest.
• Savings: for storing money; earns interest; limited withdrawals per month.
• Both are FDIC insured up to $250,000 per bank per depositor.

Credit Score (FICO)

Range: 300-850. Components:

• 35% — Payment history: paying on time is the biggest factor.
• 30% — Credit utilization: keep below 30% of total limit; below 10% is ideal.
• 15% — Length of credit history: older accounts help.
• 10% — Credit mix: having credit cards + installment loans (car, student) is better.
• 10% — New credit: applying for multiple accounts in a short period hurts.

Credit Score Ranges

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

Building Credit as a Student

• Secured credit card (deposit-backed)
• Become an authorized user on a parent's card
• Student credit card with low limit
• Always pay the full balance monthly to avoid interest
• Keep utilization below 30%