By: Tyler Eggers

Basics of Credit

What is Credit?

Credit is the ability to borrow money in return for a promise of future payment. You but now, and pay later. There are two types of credit: Personal Loans and Credit Cards. Personal loans are used for home, car and school, while credit cards are used for smaller objects like groceries and clothes.A Credit Bureau is a company that send your credit rating to credit card companies and financial institutions. A credit card company will determine if you're Creditworthy by looking at your Credit Report and Credit score.If the company accepts you and sees you pay back on time, then they will become your Lender. A bad credit score can be bad and follow you for years. Ex. finding a house or job.


Your Credit History is important. It shows your history of an individuals past borrowing and repaying. If you have a bad credit history then companies will think you're not Creditworthy.

If you are not creditworthy it will be hard to get credit. If you were bad at repaying last year but now pay back all the time and on time this year, it won't matter. Companies will still look at that and wonder if you are creditworthy and have less a chance. Credit is good and important to have because if your have to pay for something immediately that you might need soon, you can use credit and pay back later.

What you need to know about credit cards?

A credit card is a plastic card issued by a bank, business, etc., for the purchase of goods or services on credit. credit cards have an Annual fee. Credit cards can come in handy but can also be risky. Credit is good if you always pay back on time, if you don't then it will come to haunt you, even if you didn't pay two years ago. So you should always pay back, doing so will make you have a good credit history and score and make you look more trustful. Your credit is limited, it's not an infinity amount of cash that you have on it, you have a Credit Limit. How much money is on the credit card, lowest is $500.If you go over the amount that is on the card then you have to pay an Over the Limit Fee. Credit cards are mostly used for small things: clothes, food, entertainment. Not for buying cars or a home, but a bad credit score can prohibit you from getting a house or car. If you violate the terms of your cardholders agreement you will be charged a Penalty Fee.

Smart Consumer

Using your credit card in a safe and appropriate way is important. Some things you should know about using your credit card wisely: Know the rules of the card and make your own rules for the card as well, When you use the card pay the balance, Don't only make minimum payment, Don't use it to make everyday purchases, Make sure you will be able to pay back, Choose need over wants.