Final answer:
To establish a personal credit rating, one must be at least 18 years old, have a credit card for six months or more, maintain a low-risk financial profile, and display good payment habits by paying debts on time.
Step-by-step explanation:
To establish a personal credit rating, several criteria must be met:
You must be at least 18 years old to legally enter into credit agreements.
Having a credit card in your name for six months or more can begin to build a credit history.
Maintaining a low-risk profile usually means you are managing your debts well and not overextending yourself financially.
Having good payment habits, such as paying bills and loans on time, is essential for establishing a solid credit rating.
These factors contribute to the confidence banks and lenders have in your ability to repay debt, which is reflected in your credit rating. Additionally, factors such as savings and investments can influence a bank's lending decision.
Remember, your credit history includes all past and present debts, and any minimum payments required should be made on time to avoid accumulating interest. Further, it's crucial to understand that interest rates on borrowed money, such as from credit cards, will affect the overall cost of carrying a balance.