CREDIT
By Estefania Ramirez
The Basics of Credit
100 X .15 = $15
100 + 15 = $115 <--- This is the total amount of money spent.
By using credit one loses the opportunity to spend that $115 later on something.
Credit was created to aid people in buying more things, and aid in stimulating the economy. When established they abused the institution and now there are stricter rules on whom is able to use the credit system. How people are chosen are based on creditworthiness. Creditworthiness is one's ability to pay back loans and payments on credit cards. This comes from a variety of factors such as one's Credit Score. A Credit Score is between 300 - 850, and based on all the expenses made as well if one paid on time or not. This can be found one's Credit Report gives the details that lead to one's score. The Credit Report is given by a Credit Bureau such as TransUnion.
Credit cards: What You Need to Know
Vocabulary Watch
Credit limit
Credit score
This score is used in determining whether one is able to receive credit or not. This shows how well one pays back their debts and if they pay on time. The higher the score the better.
Creditworthiness
Capital: This is the value of the assets one owns to see if they can be used as collateral in case of a default.
Capacity: This is based on the income a person brings in to see if they are able to pay their loans and other debts back with room to breathe.
Character: This is to see if the person they are giving the credit to is responsible and dependable. This is based on whether payments they've made have been on time or not. Also based on whether a person is stable and constant.