Credit Newsletter

Ariana Maggio

Section 1: The Basics of Credit

What is credit?

  • Credit is the ability to borrow money for a promise of future payment. Creditworthiness is used to get credit.

What are the forms of credit?

  • Credit cards and personal loans are the two forms of credit.

What costs are associated with credit?

  • You have to pay an interest fee which is an annual percentage rate every month.

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

  • A Credit Bureau gives the consumer a credit report. If on your credit report your credit score is good, then it is decided how much credit you get. The lender judging you uses the three C's which are character, capital, and capacity.

Section 2: Vocabulary Watch

Three important vocabulary terms are credit cards, personal loans, a credit report, and your credit score. Credit is something we all can receive at the age of 18. Credit is money that is borrowed but promised to be paid back in the future. Credit cards allow us to spend this money. Each credit card has a maximum amount of money on it that each consumer is granted. The amount you earn for your credit is determined on your credit score that comes from your credit report. A record is kept throughout your life of your credit and how you have demonstrated your creditworthiness to a bank. The better your credit score, the more money you are granted. The lender giving you credit judges you on the three C's. The three C's are capital, character, and capacity. These are all very important concepts to keep in mind when talking about credit.

Section 3: Credit Cards: What You Need to Know

What is a credit card?

  • A credit card is a card given to you with borrowed money on it. It has an interest rate every month added on.

Where can you use credit cards?

  • You can use a credit card almost anywhere but you need to keep in mind there are annual fees every month and penalty fees if you exceed your amount or do not pay it back by the time period given to you.

What are the benefits and costs of using credit cards?

  • The benefits of a credit card are you can buy what you want at any time but there is a credit limit. The costs of using credit cards is there is an over-the-limit fee when you exceed the maximum amount given to you on that card.

Section 4: Smart Consumers: Don't Fall Into the Credit Card Trap

There are several ways to stay safe when using credit but you have to be very careful. Starting off small is a really good idea. Only apply for credit if you know you can pay it back. If you know financially you are unstable do not use your credit because it can really make or break you for your future. Every consumer's goal is to have a good credit score for their future. Consumer's should start off by choosing wisely. You should pay cash for most things purchased and pay your amount due in full. Consumer's should also consider loans first rather than a credit card to purchase things.