Credit Project

Jess Willis

Basics of Credit

Credit is a way to spend money that you don't currently own from a lender in return for the promise to pay it back later. Credit can be built by owning a credit card or taking out a personal loan.This is a benefit of starting to establish credit young. It can also take a turn you own too many credit cards, can't handle the payments or are late making a payment. This can all lead to bad credit. While using a credit card, you have to pay an annual percentage rate, or APR. This can be a determining factor as to which card you chose to sign up with due to different rates for different types of cards. How well your capital, capacity and character are can determine your creditworthiness, how reliable you are to pay back the money you have spent. Failure to pay on time can result in a lower credit score. Your credit score is important because credit bureaus have reports on every adult and their credit history. When you want to get a loan or open a new card, your credit is run and you get a credit report. Your credit score can limit you from what you are available to get because of bad credit.

Credit Cards

What You Need to Know

A credit card is an account you can open to borrow money in return to pay in back later. Many companies offer benefits for using their credit card. Most credit cards can be used anywhere to make a purchase. Using a card is not free however, annual fees are applied. APR is interest that is paid on your credit card. Many companies start at 0% APR and many raise to 12-20% after about a year. The lower the APR, the less money spent on a payment. Credit cards have limits on the money that one can spend while using it. There are many upsides to using a credit card such as building your credit, convenience and the many benefits such as discounts on travel and merchandise that some companies offer. There are also many downfalls. Penalty fees are applied when you are late on a payment. Though there may be a grace period, many companies charge for overdue payments. You may also be over your limit and your card may be declined. Many people let their spending go way over or open too many cards which can lead to debt.

Smart Consumers: Don’t Fall Into the Credit Card Trap

To grow your credit score positively, you need to be a smart consumer. When trying to build your credit from the start, make sure to limit your credit card use instead of buying tons of unnecessary things. This can lead fast into not being able to make your payment and eventually debt. Make sure that while signing up you read what you are getting such as APR, late fees, balance transfer fees and benefits and match these to your needs. Also, limit the amount of credit cards you have open. To build good credit with your card as well as avoiding fees, be sure to make payments on time and in full.