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Money is an excellent tool to teach kids how the world operates. You can use financial principles to teach them about social issues, too. That's because money is about values, relationships, choices and self-worth.

One important lesson you need to teach your kids before they leave home is about how to build and maintain good credit. Let's title this lesson:

Your Credit Past Shapes Your Credit Future

The medical record that your doctor keeps in his office is very important because it shows your medical history. It gives doctors clues about the kind of health you can expect in the future.

Your school keeps records on you, too. Your test scores are in there, your attendance records as well as activities you have participated in.

By the time you turn 18, you will most likely have something similar called a credit file. Credit bureaus will collect information about how you manage your money and if you are "creditworthy." Credit bureaus keep records on where you live, where you work and your history of repaying loans. They collect the good things you do and also keep track if you make bad choices, which is called "negative" information.

Negative information in credit reports can affect a person's ability to buy a house and get a good job. It determines how much you will pay for your car insurance. Bad credit can make it difficult to rent an apartment or get a job. Lots of employers check credit reports when deciding who is the best person to get the job. Many people believe that the way you manage your money and handle credit is an indicator for how you handle the rest of your life.

Employers look for people who are on time and can be trusted. The way you handle your money says a lot about your character.

The 3 "Cs" of Credit

There are three things creditors look at to determine creditworthiness: character, capacity and collateral.

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