The Truth Behind Credit

How Credit works

Basics of Credit

Ever wonder what credit is and its importance? Credit is the ability to obtain goods or service before payment but agreeing to pay in the future. Credit is a great way to establish your financial record. There are many different forms of credit such as credit cards, student loans, installment loans, secured and unsecured loans. Each form of credit helps businesses and banks to ensure their trust in you to repay a loan. One factor that helps is your credit score which is a statistic numerical expression of a persons credit rating. The scoring is between 300 and 850, the higher your credit score the better.


When you apply for any type of credit lenders are given your credit history by the Credit Bureau. They collect information of an individuals credit ratings to create a credit report and make it available to financial institutions.This is a way for lenders to determine a person's creditworthiness.

Credit Cards

Credit cards is a card issued by a bank or business allowing the holder to purchase goods and service on credit. You can use a credit card basically everywhere!.Having a credit card is an easy way to build credit which comes with many benefits and disadvantages. Using a credit card is convenient for traveling, expensive purchases and cases of emergencies. When you open up a credit card it comes with interest APR is the cost for borrowing money. Having a credit card comes with many agreements such as annual fees, credit limits, interest rates, penalty fees and over the limit fees. Credit limits is the maximum amount of credit a lender provides you with. With a credit limit you must be aware of your spending habits because it is easy to find yourself in debt. Interest rate is the portion that you are charged borrowing money. When you have a credit card it is important that you pay your bills on time. This will increase your credit score and will benefit you in the future.

Bank Of America Vs. Chase Bank

Ever wonder what credit card would be a great pick? Comparing Bank of America's credit card Cash rewards and Chase's Freedom Unlimited is great place to start. They have an annual fee of $0 and 0% annual rate for the first 12 billing cycles. After the first 12, the regular annual rate is 13.24%-23.24%. Bank of America also charges other fees such as balance transfer fees $10, cash advances$10/ 3%, late payment for $37 and returned checks for $27. Besides all the fees this card comes with benefits like 1% cash back on every purchase, 2% at grocery stores and now at wholesale clubs, 3% on gas and up to 2,500 in grocery/wholesales.


Chase Freedom unlimited has an annual fee of $0 and 0% intro APR for the first 15 months and after those first months the regular APR is 14.24%- 23.24%. Just like Bank of America Chase also charges fees such as balance transfer is $5,cash advances -$10

late payments-$15 if less than $100 , $27 if $100-$250 and $37 if $250. It includes special benefits like earning a $25 bonus when you add your first authorized user, earn unlimited 1.5% cash back on every purchase and redeem cash back for any amount at any time.

Credit Tips

Using credit can be great but also have some downfalls if you are not careful. First thing you want to focus on is your spending habits. Set limits for yourself and learn how to spend money efficiently. Ask your yourself if it's worth buying and is it something you really need? Don't think that you can buy something expensive just because you can use credit. You still have to pay it off and also pay for interest. Set a time for you to sit down and review all your transactions and set your priorities. Save money and pay your bills on time, this will help you save money and build good credit for your future.