Credit Scores Demystified: Why They Matter & How to Build One Safely

If you’re new to adulting, money, or just trying to get your life organized, you’ve probably heard adults talk about credit scores like they’re some secret password to the world.

Spoiler: they kind of are.
Even if you’ve never checked yours, your credit score can shape some pretty big parts of your future; from renting your first apartment to getting a cellphone plan.

The good news? Understanding your credit doesn’t have to be confusing or scary.
Here’s the breakdown: simple, youth-friendly, and stress-free.

 

What Is a Credit Score (and Why Should Youth Care?)

A credit score is basically a trust score that shows how reliably you handle money.

It’s a 3-digit number (300–900 in Canada) that answers one question:
“Can you be trusted to pay things back on time?”

And even if you're young or just starting out, credit scores matter more than you think:

·       Phone contracts

·       Renting an apartment

·       Getting approved for your first credit card

·       Financing a car

·       Some jobs in finance or government

·       Student loans or future loans

A good score = More freedom, easier approvals, and lower fees.
A low score = More obstacles and higher costs.

Bottom line: It’s not about having a lot of money; it’s about building good money habits early.

 

So… What Actually Impacts Your Credit Score?

1.       Paying on Time = EVERYTHING

Missing payments hurts your score more than anything.
Even one late payment can stick around for years.

2.       Your Credit “Balance”

Using a credit card? Keep your balance low, ideally below 30% of your limit.

Example:
$500 limit → Try to stay under $150 most months.

3.       How Long You’ve Had Credit

The longer you’ve had a credit product (like a small credit card), the better.

4.       How Often You Apply for Credit

Applying for too many cards or loans at once can lower your score temporarily.

5.       Mix of Credit

This is not important for beginners, but having different types of credit later helps.
For now, focus on just 1 starter credit option.

 

How to Safely Start Building Credit as a Young Person

 1. Start Small with a “Starter” Credit Card

Look for:

·       Low limit ($300–$500)

·       No annual fee

·       Student or secured card options

Use it for one or two small purchases a month and pay it off fully.

 2. Pay EVERYTHING on Time

Not just credit cards:

·       Phone bill

·       Utilities

·       School fees

If it goes to collections → your score drops fast.

3. Keep Your Spending Low

Credit cards aren’t free money.
Use them like a tool, not a bonus paycheck.

4. Check Your Credit for Free

You can check your score on:

·       Borrowell

·       Credit Karma

·       Equifax (free report once a year)

Checking your own score does NOT hurt it.

5. Avoid the Biggest Youth Trap: “Buy Now, Pay Later”

Klarna, Afterpay, and Affirm feel harmless… until they aren’t.

Late payments can:

  • Affect your credit

  • Stack up fees

  • Create quiet debt

If you can’t pay it fully → don’t use BNPL.

 

“Red Flags” That Can Hurt Your Credit Fast

  • Missing payments

  • Maxing out your card regularly

  • Not checking your statements

  • Applying for too many cards

  • Co-signing loans for others (very risky)

And the biggest one for youth:
Ignoring credit altogether.
Credit doesn’t go away, but bad habits do catch up.

The Good News? You Can Start Today.

Credit is not about being rich, perfect, or financially experienced.
It’s about doing small, smart things consistently.

When youth understand credit early, they set themselves up for:

  • Smoother adulting

  • Fewer financial surprises

  • More independence

  • More opportunities

 

Want Support?

Bring your questions to your next SEED meeting or reach out anytime.
Your financial confidence starts with understanding the basics, and you’re already ahead of the game!

Alison Burrows