CREDIT

The Basics of Credit

What is credit? Makes big purchases possible, but you have to pay it off. Credit is not free money.

What are the forms of credit? home loans, student loans, car loans, credit card loans, personal loans.

What costs are associated with credit? Monthly payments

What determines if someone gets credit and how much they get? Character, capacity, credit worthiness, collateral


Credit- The ability to borrow money in return for a promise of future repayment.

Credit Score- numeric calculation based on your credit report

Credit Bureau- a company that collects information about consumers’ credit history and sells it to lenders.

Credit Report- get one free credit report every year.

Creditworthiness- measure of reliability to repay a loan

● Interest (APR)- Yearly cost for the money that you borrow. If late the rate goes up.

Lender- An organization or person that lends money.

Credit Cards- A plastic card issued by a bank, business, etc. for the purchase of goods or services on credit.

Personal Loans- A loan you can receive that you can use for personal use.

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Vocabulary Watch

  • Credit history- Record of your past borrowing and repayments.
  • Cosign- An adult who would cosign for their child on a loan, so if the child doesn’t pay then the parent will have to
Capital-Value of what you own.
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Credit Cards: What you need to Know

  • Credit history- Record of your past borrowing and repayments.
  • Cosign- An adult who would cosign for their child on a loan, so if the child doesn’t pay then the parent will have to
  • Capital-Value of what you own.
Section 3: Credit Cards: What You Need to Know
In this section, you should discuss the basics of credit cards.

Questions to answer:
● What is a credit card? a plastic car that can be used for goods and services on credit.
● Where can you use credit cards? Everywhere
● What are the benefits and costs of using credit cards? The benefit of using a credit card is that you can purchase expensive stuff and not have to pay it all at the store. There is a minimum payment on a credit card.

You must use the following vocabulary words in this section:
● Annual Fees- A yearly fee charged by credit grantors for the privilage of using a credit card.
● Credit Limit- Total amount of money you’re able to borrow.
● Interest Rate (APR)-Yearly cost for the money that you borrow. If late the rate goes up.
● Penalty Fees- late fee, annual fee, over the limit fee
● Over-the-limit fee-Fees that are charged when you exceed the balance on your card.
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