Credit Corner
The Basics of Credit
As stated before, a person's creditworthiness determines if they get credit and how much they get. A person's creditworthiness is broken down into three sections: capital, capacity, and character. In order to truly evaluate whether or not a person is responsible enough to get a credit card, credit card companies look at the value of your belongings, if you are capable of paying them back with interest, and if you are dependable. Your dependability is based on your credit history.
Vocabulary Watch
Annual Fee
Annual Percentage Rate (Interest)
The interest on credit card expenses; If the entire credit card balance is paid on time there is no interest that you need o pay.
Credit Score
A number assigned to a person that indicates to lenders their capacity to repay a loan (a high credit score is a good credit score). You can improve your credit score by paying credit card payments on time.
Credit Cards: What You Need To Know
A credit card is a small plastic card issued by a lender that allows the holder to purchase goods and services on credit for a fee or interest on their purchase. You can use credit cards pretty much anywhere. Some credit card companies even offer rewards if you use your credit card for certain expenses, like gasoline or airline tickets. When you are thinking of applying for a credit card you must consider many factors in order to find the credit card that is best for you. For the most part, credit card companies offer 0% APR for a year or so and also don't require and annual fee. But, after the year is up your interest rate increases to about 20%. One must also be aware of their credit card's credit limit so that you don't get charged an 'over-the-limit' fee for going over. On top of over-the-limit fees, one must also be aware of additional penalty fees such as late fees and cash advance fees. Although credit cards to seem very costly what with it being very easy to go into debt and ruin your credit score, they do have benefits. As stated before, many credit card companies do offer rewards for using your credit card. These rewards include and are not limited to free plane tickets and early access to concert tickets.