Money & Economics · free reference

Part 6: Borrowing, interest and credit scores

How borrowing works, Credit reports and scores and Paying for college: student aid basics. Every fact lists its source, and you can share a link to any topic.

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How borrowing works

#how-borrowing-worksLevels:3–56–8TeensLast checked Oct 27, 2026

In short: Borrowing lets you have something now and pay later, but borrowed money must be paid back, plus a fee called interest.[1]

Facts

  • A loan lets you have something now and pay for it later.[1]3–5
  • Borrowed money is not your money. It has to be paid back.[1]3–5
  • The fee you pay for borrowing money is called interest.[1]3–5
  • It is very important to pay loans back on time.[1]3–5
  • The amount of money you borrow is called the principal, and the time you take to pay it back is called the term.[1]6–8
  • Before borrowing from any lender, think about your income, your expenses and whether you can pay the loan back.[1]6–8
Go deeper: for teens and grown-ups (2)
  • An interest rate is the yearly cost of borrowing money, shown as a percentage. It does not include fees.[2]Teens
  • The annual percentage rate (APR) is a broader measure of what borrowing costs, because it also counts fees and other charges.[2]Teens

Key words in three languages

EnglishSpanishPortuguese
loan[3]préstamo[4]empréstimo[5]
interest[1]interés[4]juros[5]
principal[1]capital[4]not sourced yet
annual percentage rate[2]tasa de porcentaje anual[4]not sourced yet
lender[1]prestamista[4]credor[5]

Each word cites a page that uses it.

Practice this

Sources (5)
  1. Federal Deposit Insurance Corporation, Money Smart News for Kids · Chapter 7: Loans and Credit · fdic.gov/resources/consumers/money-smart/money-smart-news/kids/chapter-7.html (checked Oct 27, 2026)
  2. Consumer Financial Protection Bureau · What is the difference between a mortgage interest rate and an APR? · consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135 (checked Oct 27, 2026)
  3. Federal Deposit Insurance Corporation, Money Smart News for Kids · What Is a Bank? · fdic.gov/resources/consumers/money-smart/money-smart-news/kids/documents/ch1.pdf (checked Oct 27, 2026)
  4. Consumer Financial Protection Bureau · Glossary of English-Spanish financial terms (Spanish style guide and glossary) · files.consumerfinance.gov/f/documents/cfpb_adult-fin-ed_spanish-style-guide-glossary.pdf (checked Oct 27, 2026)
  5. Wikipédia em português · Juro · pt.wikipedia.org/wiki/Juro (checked Oct 27, 2026)

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Credit reports and scores

#credit-reports-and-scoresLevels:6–8TeensLast checked Oct 27, 2026

In short: Your credit depends on how you paid back loans. You can see your credit reports free once a week, and most credit scores range from 300 to 850.[1][2][3]

Facts

  • Your credit is your ability to get a loan, based on how you paid back other loans.[1]6–8
Go deeper: for teens and grown-ups (5)
  • Anyone with a credit report can see it online for free once a week at AnnualCreditReport.com.[2]Teens
  • The three major credit reporting companies are Equifax, Experian and TransUnion.[2]Teens
  • A credit score is a prediction of how you will handle credit, such as how likely you are to pay a loan back on time.[3]Teens
  • Most credit scores range from 300 to 850.[3]Teens
  • Scores usually look at your bill-paying history, how much you still owe, how much of your available credit you are using and new applications for credit.[3]Teens

Key words in three languages

EnglishSpanishPortuguese
credit[1]crédito[4]not sourced yet
credit report[2]informe de crédito[4]not sourced yet
credit score[3]puntaje crediticio[4]not sourced yet

Each word cites a page that uses it.

Practice this

Sources (4)
  1. Federal Deposit Insurance Corporation, Money Smart News for Kids · Chapter 7: Loans and Credit · fdic.gov/resources/consumers/money-smart/money-smart-news/kids/chapter-7.html (checked Oct 27, 2026)
  2. Consumer Financial Protection Bureau · How do I get a free copy of my credit reports? · consumerfinance.gov/ask-cfpb/how-do-i-get-a-free-copy-of-my-credit-reports-en-5 (checked Oct 27, 2026)
  3. Consumer Financial Protection Bureau · What is a credit score? · consumerfinance.gov/ask-cfpb/what-is-a-credit-score-en-315 (checked Oct 27, 2026)
  4. Consumer Financial Protection Bureau · Glossary of English-Spanish financial terms (Spanish style guide and glossary) · files.consumerfinance.gov/f/documents/cfpb_adult-fin-ed_spanish-style-guide-glossary.pdf (checked Oct 27, 2026)

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Paying for college: student aid basics

#student-aid-basicsLevels:TeensLast checked Oct 27, 2026

In short: The FAFSA is the free form students use to find out if they can get federal help paying for school.[1]

Facts

  • Students use the FAFSA, the Free Application for Federal Student Aid, to learn if they can get help paying for school.[1]Teens
  • Filling out and sending the FAFSA is free, and it opens the door to the largest source of financial aid for school.[1]Teens
  • For the 2026–27 school year, the federal deadline to send the FAFSA is June 30, 2027.[1]Teens

Key words in three languages

EnglishSpanishPortuguese
financial aid[1]ayuda financiera[2]not sourced yet

Each word cites a page that uses it.

Practice this

Each word cites a page that uses it.

Sources (2)
  1. USAGov (General Services Administration) · Free Application for Federal Student Aid (FAFSA) · usa.gov/fafsa (checked Oct 27, 2026)
  2. Consumer Financial Protection Bureau · Glossary of English-Spanish financial terms (Spanish style guide and glossary) · files.consumerfinance.gov/f/documents/cfpb_adult-fin-ed_spanish-style-guide-glossary.pdf (checked Oct 27, 2026)

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Questions parents ask

What is a credit score?

A credit score is a prediction of how you will handle credit, such as how likely you are to pay a loan back on time.[1] Most credit scores range from 300 to 850.[1] Scores usually look at your bill-paying history, how much you still owe, how much of your available credit you are using and new applications for credit.[1] Anyone with a credit report can see it online for free once a week at AnnualCreditReport.com.[2]

Read more: Credit reports and scores

What is interest on a loan?

The fee you pay for borrowing money is called interest.[3] The amount of money you borrow is called the principal, and the time you take to pay it back is called the term.[3] An interest rate is the yearly cost of borrowing money, shown as a percentage. It does not include fees.[4] The annual percentage rate (APR) is a broader measure of what borrowing costs, because it also counts fees and other charges.[4]

Read more: How borrowing works

Is the FAFSA free?

Students use the FAFSA, the Free Application for Federal Student Aid, to learn if they can get help paying for school.[5] Filling out and sending the FAFSA is free, and it opens the door to the largest source of financial aid for school.[5] For the 2026–27 school year, the federal deadline to send the FAFSA is June 30, 2027.[5]

Read more: Paying for college: student aid basics

Sources for these answers (5)
  1. Consumer Financial Protection Bureau · What is a credit score? · consumerfinance.gov/ask-cfpb/what-is-a-credit-score-en-315 (checked Oct 27, 2026)
  2. Consumer Financial Protection Bureau · How do I get a free copy of my credit reports? · consumerfinance.gov/ask-cfpb/how-do-i-get-a-free-copy-of-my-credit-reports-en-5 (checked Oct 27, 2026)
  3. Federal Deposit Insurance Corporation, Money Smart News for Kids · Chapter 7: Loans and Credit · fdic.gov/resources/consumers/money-smart/money-smart-news/kids/chapter-7.html (checked Oct 27, 2026)
  4. Consumer Financial Protection Bureau · What is the difference between a mortgage interest rate and an APR? · consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135 (checked Oct 27, 2026)
  5. USAGov (General Services Administration) · Free Application for Federal Student Aid (FAFSA) · usa.gov/fafsa (checked Oct 27, 2026)