Credit Newsletter

David Durkins

Basics of Credit

What is credit? Credit is the ability to obtain goods or services before payment, based on the trust that payment will be made in the future which will benefit your creditworthiness. What are the forms of credit? The forms of credit are credit card loans, auto loans, mortgage loans, personal loans, and home-equity loans. Lenders lend out money that you need to pay back and if you don't it affects your credit score. What cost are associated with credit? The cost of credit can harm your credit score if used immaturely, for example if you are making a payment on something and don't pay all of it off then you will be charged interest. What determines if someone gets credit and how much they get? Credit score because it determines the eligibility for all kinds of financial endeavors, such as credit cards and home loans. The credit bureau collects information relating to the credit report of individuals and makes it available to credit card companies and financial institutions.

Vocabualry

Creditworthiness- trustworthiness with money as based on a person's credit history; a general qualification for borrowing.

Credit- The ability to obtain goods or services before payment, based on the trust that payment will be made in the future.

Credit Score- A credit score in the United States is a number representing the creditworthiness of a person, the likelihood that person will pay his or her debts

Credit Cards: What you need to know

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the user from which the user can borrow money for payment to a merchant or as a cash advance to the user. The bad side of credit cards are that you buy and continue buying things and when the bill paying time arrives, you fall into debt badly. That is the time you start hating your credit card. You make financial mistakes with your credit card and the credit card companies earn money from your mistakes.

Smart consumers don't fall into the credit card trap

Pay your credit card bills on time, stay well within your credit limits and be careful not to take on too much debt with too many cards and you'll begin to establish an excellent record on your credit reports from all three credit reporting agencies. The Fair Credit Billing Act covers online purchases, making a credit card the best way to pay in cyberspace. If you're worried about security, many credit card companies offer a one-time use account number for large online purchases that keeps your real account number off of the Web.