Credit Newsletter

Hanna Kozina p.7/8

Section 1: The Basics of Credit

  • A credit is an ability to borrow money and return them as promised. It is not free.
  • Forms of credit: loans,

    credit cards.

  • You have to pay interest(APR%) for borrowing money.
  • Creditworthiness determines how much credit you get. The information that includes the capital, capacity, and character of your credit comes from

    credit bureau. Lenders will look at your credit report info to determine if they can give you a personal loan. Your credit score also shows how good you are with your money and how wisely you're using it.

Section 2: Vocabulary Watch

  • Credit score: a score between 300-850. The higher your score is, the better chance of getting a loan you have. Things that can affect your credit score are payments, the amount of debt, credit history, number of your credit cards.
  • Creditworthiness: consists of-- capital - is how much savings and investments you have; capacity - your ability to repay a loan; character - kind of job you have, residence, how responsible you are.
  • Personal loan: when you are taking a loan, the lender will look up the info about your credit history. If you have a bad credit history, you won't get a loan.

Section 3: Credit Cards

  • Credit card is a card that doesn't have money on it, but you have to pay for everything you used it for at the end of the month. You have to pay annual fees for using it.
  • You can use your credit card to pay for goods, however don't go over credit limit.
  • The benefit of a credit card is that you don't have to carry cash everywhere. The downsides are that if you don't pay the bill, you're going to get charged and the interest rate might get higher. If you spend over the limit - you must pay penalty fee.

Section 4: Smart Consumers

  • The best way you can keep a track of how much you're spending with your credit card is to write down your spendings, so you know how much you need to pay at the end of the month. Also, it is very important to pay on time the whole amount and don't spend over the limit because you're going to get charged penalty fees, and that will be recorded on your credit history. The good credit card would be the one that is least expensive and has the greatest benefits.