What is it? And why is it important?

By: Jenny Lewanczyk

What is credit?

Credit is the ability to obtain goods while not actually having the money at the moment. The payment will be made in the future.

What are forms of credit?

Loans- you borrow money in a loan form and pay back the money in the future

Types of loans: Student loans and car loans.

Credit cards- give you the amount of money you need at the moment but you have to pay back the money once a month. There are many types of credit cards that fit your needs and/or personality.

What costs and benefits are associated with credit?

Your credit score depends on your history of credit and whether or not you pay the bills on time.

Advantages- Convenience, record keeping, instant cash, perks.

Disadvantages-Overuse, High cost fees, bad credit score, Interest (APR).

What determines if someone gets credit and how much they get? Or Creditworthiness!

The credit bureau- is a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

credit report -contains your credit history as reported to the credit reporting agency by lenders who have extended credit to you.

Character- Are you reliable? Will you repay the debt?

Capital- What if you don't repay the debt? Do you own something valuable?

Capacity- Can you repay the debt?

What you need to know about Credit Cards!

What is a credit card?

-the ability of a customer to obtain goods or services before payment, based on the trust that the payment will be made in the future.

Where can you use credit cards?

-You can use credit cards about anywhere where they accept it. For example, grocery store, bank, online, the zoo, or even in a restaurant.

What are the benefits and costs of using credit cards?


  • Able to buy needed items now

  • Don't have to carry cash

  • Creates a record of purchases

  • More convenient than writing checks

  • Consolidates bills into one payment


  • Interest (higher cost of items) APR.
  • May require additional fees such as penalty fees and Over-The-Limit Fee.
  • Financial difficulties may arise
  • Increased impulse buying may occur. Might go over credit limit.
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Shopping for Credit!

Comparing 2 Credit Cards!

Capital One Journey

Annual Fee: $0

APR: 20.24%

Other Fees: Penalty up to $35

Benefits: 24 hour travel assistance, extended warranty, auto rental insurance, travel accident insurance.

Discover it

Annual Fee: $0

APR: 0%

Other Fees: none

Benefits: Rewards, allow co-signer, 0% APR, If GPA is higher than 3.0 you get $20 cashback,

Tips for using credit wisely!

Establish a steady work record

Pay bills promptly. Never ever miss a payment!

Open checking account and don't bounce checks

Open savings account and make regular deposits

Apply for a local store credit card and make regular monthly payments.