How do credit scores work and how are they calculated?

A credit score is like a report card for how well you borrow and pay back money.

Imagine you're sharing toys with your friends. If you take a toy and remember to give it back, your friends think you're responsible. But if you keep taking toys and never return them, they might not want to lend you anything else. That’s like having a good or bad credit score.

Think of your credit score as a number that shows how trustworthy you are with money. Lenders use this number to decide whether to give you more toys (or loans).

Your score is made from things like:

• How often you pay back what you owe
• If you have too many toys (loans) at once
• How long you've been borrowing and paying back

Every time you do something with money, like buying a snack with a card or borrowing a toy, it can change your score a little, just like how every game affects your report card.