Understanding the ins and outs of credit can be a complicated and confusing task. Many factors go into how credit is used, the cost of credit, and how credit affects your financial future, both good and bad. If you don’t know how credit works and how to use it responsibly it can mean problems further down the road that could affect your life for years.

Among the most influential elements of your credit score is your credit lines through credit cards. Credit cards are directly connected to the 5 aspects used to calculate your credit scroe:

Bill Payment History - 35%

Amount Owed on Credit Lines - 30%

Length of Credit History - 15%

Types of Credit - 10%

New Credit Applications - 10%

They go hand in hand, without good credit it's difficult to get credit.

Bad credit will also cost you in the form of interest rates that average over 4% higher than those given to people with good credit. Four percent may not seem like that much, but when it's tacked onto a mortgage or car loan you can end up paying thousands more for the use of the credit.

The best way to keep this unfortunate circumstance from happening is to learn early how to handle credit. For many of us we’ve already had to learn from trial and error on our own. But today its become easier and more accepted to discuss the family financials with our children and pass our knowledge and experience on to them for a financially savvy future generation.

However, far too often we ignore our responsibility to teach our children even the basics of money and credit. But it’s something that will follow them for the rest of their life all the way to retirement and estate planning. And in today's world with online shopping, flight reservations, bill management and much more a credit card is becoming more of a necessity.

It’s hard to face the fact that our children will be on their own someday without us there to guide them. But there’s no better way for them to learn about credit than having an accountability partner in a parent.

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