The importance of building credit

Arianni De la Rosa

What is credit?

Credit is borrowed money that you can use to purchase goods and services when you need them and agrees to repay the lender at some later date. There are different forms of credit:
  • Revolving credit. With revolving credit, you are given a maximum credit limit, and you can make charges up to that limit.

  • Charge cards. While they often look like revolving credit cards and are used in the same way, charge accounts differ in that you must pay the total balance every month

  • Service credit. Your agreements with service providers are all credit arrangements.

  • Installment credit. With installment credit, a creditor loans you a specific amount of money, and you agree to repay the money and interest in regular installments of a fixed amount over a set period of time.

  • Personal loan: establish consumer credit.

  • Loan: Make funds available.

Cost and benefits of the credit

Advantages

  • Credit is convenient. You do not need to carry a lot of money with you.

  • You may save money, because you can take advantage of sales.

  • Credit can help if you need money for emergencies, such as unemployment, illness, death, or property loss.

  • Credit is handy for making purchases through the mail, telephone, and Internet.

  • Credit Bureau make the credit available.
  • Credit Car: you can spend the money and pay to the company later.

Disadvantages

  • Credit usually costs more than paying cash. Interest and other charges may be added to the purchase price

  • Credit ties up future income. When you use credit, you owe money that must be paid back from future income.

  • You may buy more than you can afford.

  • Credit ties up future income. When you use credit, you owe money that must be paid back from future income.

  • The APR
What determine if someone gets credit and how much they get is it is based upon factors, such as his/her history of repayment and creditworthiness.What is known is that the calculation is broken into five major categories with varying levels of importance. These categories are payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%) and type of credit used (10%).

What is credit car?

A credit card allows you to borrow money from your bank to make your purchases. People cannot get over limit fee because when their balance go over credit the purchases will put them over limit, this is also knows as credit limit. The penalty fee are for the people that are unable to pay. We can use this card in any store and everywhere. There are some cos and pros of this car:

Pros

  • You can make a large purchase now and pay it off in smaller chunks

  • Your credit card statement makes budgeting easier

  • It’s easier than carrying around a wad of cash

  • You can build up your credit score, which will be useful later on.

Cos


  • You can easily dig yourself into debt if you’re not careful about your spending

  • The ease of using credit cards can cause you to overspend

  • Interest rates can make even a small debt seem larger over time.
  • The APR

Advantage and Disadvantage

MasterCard/Freedom

Annual rate: 1%/ 30%

APR: 24%/ 24%

Fees: 0%/ 30%

Advantages of MasterCard

Price protection

Purchase assurance

Satisfaction guarantee

Disadvantages

Bad credit

lost of licence


Advantages of Freedom

Safety and security

The government can provide more services

More protection with less freedom


Disadvantages

Loss of control

lees government provide less service

Freedom has to balance with the government

Advice

The advice I will give some people about the credit and credit car is to look information of the cars so they can know the positive and the negative things. This website is going to help them a lot with those because it gives an idea of some positive and negative things about the credit car. I hope this website can determine people option and help people to chose different options.