The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. There are different forms of credit:

2 basic forms - revolving (credit cards & lines of credit) and installment (cars, personal loans, home loans)

Using Credit gives you a Credit Score. The lowest being 300, and the highest being 850. The Credit Bureau has a credit record on file for every adult along with their credit score. Your profile allows banks or other places know your credit worthiness. Your credit worthiness is based on three things: Capital- value of what you own, Capacity- your ability to pay, and Character- your sense of responsibility. If you use credit, you will have an interest rate, or an APR. The interest is what allows the lender to make money. Interest is the extra money you will have to pay along with the money you borrowed. Credit cards are the main way to use credit, you buy now, and pay later. A personal loan is an unsecured loan. This means the borrower can't be trusted to pay back the money they borrowed.

Credit Cards

A credit card is plastic card you swipe to pay that will record how much you owe. You can use a Credit Card almost anywhere if your credit score is acceptable. But you do have a maximum amount of money that you can use limited by the credit card company. This is called the credit limit. The interest rate (money you spent x company's interest %= interest rate/APR) varies depending on your credit card provider. Also, if you do not pay your credit card bills, you will be charged a penalty fee. Also, if you go over the credit limit, you will be charged another fee. Besides the fees, there are upsides to having a credit card. One of the greatest benefit is accumulating air miles. The more you spend, the more flying miles you get for air travel.

Be Smart About Credit

Be mindful that you are already spending money that you do not have. When you use your credit card, think before you buy. Can you pay this, and the interest rate back? If not, is what you're buying a need? If it's not you probably shouldn't purchase the item. There is no need to put yourself into debt. Interest piles up along with the money you spend. The more money spent, the higher the interest. Keep budgets and be mindful of how much you spend with your credit card. Also, pay those credit card bills on time!