By Maryscel Gutierrez

The Basics of Credit

What is credit? Credit is the ability to borrow money from a lender in return for a promise of future payment.

What are the forms of credit?

There are two forms of credit personal loans and credit cards.

What costs are associated with credit?

Credit is not free you must pay APR or Annual % rate

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

To get credit you you must demonstrate your creditworthiness. Your ability to pay back a loan is judged on character, capacity, capital. The Credit Bureau collects all of this information and sells it. your credit report is provided by Credit Bureau.

Credit Cards: What You Need to Know!!

● What is a credit card?

A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.

● Where can you use credit cards?

With credit cards you can buy things, withdraw money from an ATM and make balance transfers.

● What are the benefits and costs of using credit cards?

  • Annual Fee: Required annual $ amount you must pay
  • Credit Limits: Max amount you can spend using card
  • Over-the-limit : Going over credit limit
  • Late Fee: Making payment late
  • Penalty Fees: Additional fee due to late payment, over credit limit, returned payment, etc. Could also result in an increase in interest rate

Smart Consumers: Don’t Fall Into the Credit Card Trap!!

Consider a loan as opposed to using a credit card

Pay credit card balance in full

Choose card wisely

Avoid too many cards, pay cash, don’t miss payments, read what you sign, avoid identity theft, seek credit counseling if needed, beware of bankruptcy