Learning how to use plastic
The basics of Credit
The one thing that affects so many people in America is the misuse of Credit. Credit is something that is used to obtain goods/services before paying, it is all based on trust that the money will be paid back. For example a form of credit is a Credit card, it is a plastic card used to pay for good on credit. Another form of credit is a Personal loan, which is a loan made without putting collateral down and paying the money later.
The only costs associated with getting credit would be the Interest (APR) and late fees. Every time you get credit you have to pay back a certain percentage every month and if you did not pay on time you owe a late fee on top of the percentage you owed that month. If you pay a late fee once your APR will most likely go up more than it was originally and it will continue if you keep paying late fees. Before you get a late fee applied to your account you have a Grace Period to pay the money you owe.
If you ask for a loan the lender will determine your creditworthiness by checking by what the Credit Bureau said. The lender determines if you will be able to pay back the loan and if you are responsible according to what the Credit Bureau sends them. The Credit Bureau sends them your credit score and credit report. The higher your credit score the better they are willing to give you the loan and if you have a good credit report meaning you pay everything back and on time your chances are increased more.
A company that collects the information of someones credit rating to make it available to credit card companies, financial institutions, etc.
A number assigned to a person that tell the lender if the person will be capable to pay back the loan.
A report that details all the information on a person financial history and if they will be able to pay back the money they borrowed.
Credit Cards: Whats you Need to Know
Smart Consumers: Don't fall Into the Credit Card Trap
2. Do not go over your limit.
3. Always pay bills on time.
4. Don't own too many credit cards.