Credit Newsletter

Consumer Ed project

The Basics of Credit

Credit is borrowed money that you can use to purchase goods and services. You want to make sure your Credit Score is good, if you plan to use credit to make a major purchase, such as a car or a home, or want to be able to take advantage of the convenience credit can provide.

There are different forms of credit, personal loans (students loans, mortgage) and credit cards.

Credit has some cost and benefits. One of the benefits is that it allows you to have money in case of emergency, it also could give you reward points, and the credit card company can protect you and backup for you. Some cost of the credit are that make people in deft and when people pay back for a good or service they need to pay interest (APR).

What determine if someone gets credit and how much they get is your creditworthiness, your liability to pay back a loan. The Lender will also review your credit reports. A credit report contains information on where you work and live, how you pay your bills, and whether you've been sued, or arrested. Consumer Reporting Agencies (CRAs) gather this information and sell it to creditors, employers, insurers, and others. The most common type of CRA is the credit bureau.

Vocabulary Watch

Credit Cards: What You Need to Know

A credit card is a form of credit issued by the bank allowing people to purchase goods and service. The bank will give you a credit card and will determine how much money you will be able to spend and this is called credit limit. Credit cards also have fees, known as annual fees that require annual money amount you must pay, over the limit, a fee you need to pay when you go over your credit limit, and penalty fees, additional fee due to late payment, over credit limit, returned payment.

You can use your credit card wherever you want for example grocery stores, or supermarket etc…

Benefits to have a credit card are that people don’t need to carry cash with them, also people get rewards point. A cost of the credit card is that is not free and every company decide how much their customers will pay in interest rate.

Smart Consumers:

Don’t Fall Into the Credit Card Trap...

Consider a loan as opposed to using a credit card

  • Interest rate may be lower

Pay credit card balance in full

  • Avoid minimum payment trap

Choose card wisely

  • Least expensive; greatest benefits

Other tips:

  • Avoid too many cards, pay cash, don’t miss payments, read what you sign, avoid identity theft, seek credit counseling if needed, beware of bankruptcy