Section 1: The basics of credit
Credit is the ability to obtain goods or services before payment, based on the trust that payment will be made in the future
What are the forms of credit ?
Loan and Credit Bureau
Loan: Money that is burrowed and is expected to be payed back used in for paying school, car, and housing known as for personal loans
Credit: When a Lender is using money through credit cards usually from a bank for needs or things they want. The Credit Bureau usually check the credit history when Lenders request the Credit Report.
What costs are associated with Credit ?
To get Credit, you must demonstrate your credit worthiness
-Character, Capacity, Capital
Character: Sense of financial, responsibility, Dependability, Steady jobs, residence
Capacity: Financial ability to repay loan, High enough income, Major expenses and debt
Capital: Value of what you own, savings, investments, property, use capital to pay off loan if needed.
What determines when someone gets credit and how much they get ?
Credit Score and Credit Bureau usually determines how much the person will be given and if they are given credit.
Credit Bureau is where you will start every Credit Bureau has a record of every adult including:
- Missed rent payment
- Bounced Checks
- Been sued
And if you are accepted for credit do you have the ability to pay your bills on time?
Credit Score is knowing how much credit you will earn the higher the better, and you will be finding out how much you earn depending on:
- On time payments = good score
- low debt = good
- long history = good
- Limited # of credit cards = good
Section 2: Vocabulary Watch
Credit Bureau: A company that collects the credit ratings of individuals and makes them available to credit card companies, financial institutions, etc.
Credit Report: Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying,
Section 3: What you need to know
where can you use credit cards ?
what are the benefits and cost of using credit cards ?
Some of the Cost of using credit cards are Over the limit, Annual Fee, Credit Limits, and Penalty fees.
Over the limit - Going over the limit
Annual Fee - Required Annual money you must pay usually the interest (APR) is 0% to 29%
Credit Limit - Max amount you can spend using a card you usually get credit limit when you don't have any credit history they give you a little and adds more money every month just tp see if you pay on time.
Penalty Fees - is an extra fee because of late payment over credit limit, returned payment etc.
Some of the Benefits of using a credit card is it allows consumers to purchase more good. The more goods people spend there credit on the more people they need to make it meaning more jobs. People who do have a good stable job are able to spend money.