Credit Newsletter

Natalia Szaflarski

What is credit?

First off a lot of people don't know what credit is. It basically is the ability to borrow money in return for a promise of a future payment. A motto for credit is "Buy Now...Pay Later." To get credit you need to develop a credit report and maintain a good one.

What are the forms of credit?

There are two forms of credit that you can obtain, either personal loans or credit cards. Then from there personal loans can be branched out into three different loans: house loans, car loans, and school loans.

What costs are associated with credit?

A cost that is associated with credit is APR, annual percentage rate. It is an interest percentage you must pay every year on credit.

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

Creditworthiness determines if you can get credit and how much you get. It depends on three main factors: character, capacity, and capital. Those three factors are what lenders look at to determine if you are reliable to pay credit back. They may also look at you credit score, which the credit bureau issues to you, just to make sure you are completely reliable.

Credit Overall

Basically in order to achieve credit you must prove you are reliable to whoever is giving you the credit. Never delay a payment because then the amount you owe will just keep building up until you are in too much debt to get yourself out of. To show your good, or bad, credit people tend to look at your creditworthiness or credit score to check your capital, character and capacity and your reliability. Overall, maintaining a good credit will benefit you in the long run.

What is a credit card?

Many of you know about basic credit cards like VISA, MasterCard, Discover, or AMEX. However, do you know what they do? Well, they allow you to purchase goods or services that you don't have the money for on the spot. Instead of paying the full amount on the spot you'll pay monthly payments (for a car, house, etc.) or you'll get billed. There are two credit card accounts either a regular charge account, pay the full balance, or a revolving charge account (carry a balance month to month).

Where can you use credit cards?

Essentially, credit cards can be used almost anywhere now. You could use them at grocery stories, online shopping, malls, basically anywhere. Certain places require a specific credit card and will restrict other cards, but overall you can use it anywhere, almost.

What are the benefits and costs of using credit cards?

Having a credit card has both its pros and cons. Some pros are that they give you airline miles, points and cash back. But there are many cons, if you don't pay regularly. One big con is the interest rate which basically is a yearly fee you pay if you don't pay off your credit on time. Annual fee's get annoying and are a hassle, so stay on top of it all! Then there's the annual fee which everyone pays and ranges from $15 - $100. There are also the penalty fees which is an additional fee on late payments. It may give you a higher interest rate. Lastly, there's an over-the-limit fee which is a fee for going over your credit limit, maximum account you can spend with your credit card.

How to stay safe with credit cards

In order to stay safe with a credit card make sure to be ON TIME with every payment. If you can't pay off a payment within 25 days then don't purchase the good or service. The better you are with payments the less or no debt you'll have, and you'll grow a bigger credit score which always looks good for when you purchase something.