Do you know about Credit?

By: Danielle Trevino

Basics of Credit

Credit is the ability to obtain goods or services before payment. If you don't pay off your credit on time there are fees, annual fees,and late fees. Another effect of not paying on time is that your credit score will decrease. You can check your credit score with a free credit report. The four c's determine if you are able to receive a credit card: character, creditworthiness, collateral, and capacity. Credit Bureau's check your creditworthiness to help you get the best interest (APR) as possible. The forms of credit are mortgage, student, home, and installment loans. If you are a student the you should apply for a low limit credit card, prepaid card, or a student credit card.

Vocabulary is important

The money on the credit card that you use is really a lender's money. A lender is an organization or person that lends money to you, but you eventually have to pay it back. If you ever feel the need to just buy something that you may not need you can apply for a personal loan. A personal loan is a loan that establishes consumer credit that is granted for personal use. A catch to a personal loan is that you have to have a collateral. A collateral is an object that you own that has a large value (a car).

Pay with Credit Cards !

A credit card allows you to buy what you want when you want. It is the best way to pay for large items, make sure when you are buying items not to exceed your credit limit. If your go over your credit limit you will get charged with an over-the-limit-fee. You can use credit cards where all places except them. Once you purchase an item make sure to pay back the money that you used. If you don't pay back the money in time there will be a penalty fee. A penalty fee is when you is a fee put on your account because you didn't pay back the money on time. At the end of each year there is an annual fee that is put on your credit card, but is different from the interest rate. Benefits are you can use them anywhere accepted, you don't have to dig for change in your pockets, and it's fast and easy.

Don't fall into the credit card trap

Here are some easy ways not to fall into the trap:

  • Be smart and responsible.
  • Check your credit report once a year.
  • Keep your information safe.
  • Sign your card.
  • Pay more than the minimum balance.
  • Don't max out the card.