By: Jenny Guevarra
Basics of Credit
● What is credit? Credit is the ability to borrow money
● What are the forms of credit? The 2 forms of credit are personal loans and credit cards
● What costs are associated with credit? Interest, the annual percentage rate(APR)
● What determines if someone gets credit and how much they get? By your creditworthiness(are you able to pay back) and the Lender checks that by looking at The 3 C’s: Character, Capacity, and Capital. The person who carries that information along with your credit score and credit report is the credit bureau.
Words to know..
Premium- An amount to be paid for an insurance policy.
Collateral-Something pledged as security for repayment of a loan.
liability-Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time
More information about credit:
● What is a credit card? Basically a A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.
● Where can you use credit cards? You can use credit cards anytime when shopping but just make sure you’ll be able to pay it back later
● What are the benefits and costs of using credit cards?
Credit Card Costs
Credit Limits(There’s only a certain amount you can spend on a credit card but if you spend over that amount you get charged an over-the-limit fee)
DON'T FALL INTO THE CREDIT TRAP
Consider loans rather than credit cards because sometimes interest rates can be lower
Avoid having more than one card
- don’t miss payments