What is credit?

Have you ever heard the word credit? Do you know what credit means?

Credit just means borrowing money. To understand it, think about this: When you borrow money from a parent, guardian, neighbor, or friend, you usually promise to pay it back by a certain time, right? They trust you to keep your promise.

Zing in a spaceship surrounded by icons of a parent, a guardian, a neighbor, and a friend. Each icon has an arrow pointing back to Zing showing that they may have lent him money.

But what happens if you don’t pay the money back? Would you expect your friends to lend you money again? I bet not! You see, credit is like trust — you have to earn it from people.

So I bet you’re wondering, “what does credit have to do with banks?” Well, let’s take a look…

Click the Next button to learn about credit cards and loans.