What is credit?

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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.

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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.