Credit Newsletter

by Maurice Frison

The Basics of Credit

What is credit?

way to make big purchases but you have to pay it back; as your life goes on your credit doesn't just go away, your left with a credit score based on your quality as a card holder. Your score comes from the Credit Bureau to ensure that your name and credit is in order you can take a credit report to see where you currently stand. Good credit allows you to do things such as purchase houses, cars, and even borrow money from lenders

What are the forms of credit?

Home loans, car loans, student loans, personal loans

What costs are associated with credit?

Credit cards are associated with numerous fees---some known and many hidden. Some credit card companies charge monthly fees while others charge annual fees. Typical fees include application fees, cash advance fees, transaction fees, late payment fees, balance transfer fees, finance charge, penalty fees, over-the-limit fees and annual fees

What determines if someone gets credit and how much they get?

character, capacity, collateral, credit worthiness

Vocabulary watch

Credit: The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future

Interest (APR): The terms annual percentage of rate (APR), nominal APR, and effective APR (EAR) describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.

Credit Score: Numeric calculation based on your credit and determined on how trustworthy you are on paying bills on time and how much you owe

Credit Report: Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy; check it once a year

Credit cards: what you need to know

If you go over your credit limit there's a good chance you'll have to pay charges so it pays to be extra. This can result in penalty fees which could lead to debt. It can also hurt you because it may effect your APR; basically your annual fee for owning the credit card. Your penalty fees can come from things like the over the limit fee you'd pay if you still owe money at the end of the month. A credit card also comes with a credit limit which is the most your able to use on a purchase or at a time.

types: low limit secured, student account, prepaid

Smart consumers don't fall into credit card trap

There are various ways you can avoid a trap, debt, or identity theft and they include:

always use secure browser, keep info safe, sign card, don’t share account info, don’t share password, pay more than minimum balance, don’t max out, only use credit for necessities, keep track of what you charge, and always pay on time.