Credit Project

Mike Wilms

The Basics of Credit

Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. Loans and credit cards are two different forms of credit.

In order to build up your credit score, you need to start using a credit card at a young age. If you have a higher credit score, you will have more creditworthiness. The credit bureau is a company that collects the information of your credit so it can be available to credit card companies. The credit bureau and your credit report determine how much credit you get.

Some different costs and benefits that are associated with credit are interest and a lender credit. Interest is also known as the annual percentage rate (APR). This is the percentage of money you owe the bank or credit card companies when you spend their money. A lender is the person basically pays for what you buy when you swipe your credit card, until you pay them back. An example of a lender is Visa. Visa is a type of credit card that lends you money to spend, if you cannot pay it back then they increase rates so you have to pay a lot more. Another benefit of credit is a personal loan. This is when you borrow money from the bank so you can buy something like a car, or some new furniture.

What You Need to Know About Credit Cards

A credit card is a method of paying for purchases without using cash. Credit card companies extend credit to people based on their credit history and income, establishing a credit limit for the person, which is the maximum amount a credit card company is comfortable allowing someone to spend. A credit card company charges a small annual fee from the person to give them a card, If payments in full are not made monthly, the credit card company will charge interest on the amount not paid. If the person does not pay on time or anything, they are charged a penalty fee on top of the interest on their balance. If a person spends more than the credit card company has extended in credit, the credit card company can charge the person a fee for spending over-the-limit of their credit card. Most places where purchases are made take credit cards, although maybe not all types of credit cards, Benefits of credit cards are that you do not have to have cash on hand in order to make a purchase, however, if you do not have the cash when it is time to pay your credit card bill, the costs of interest and penalties far outweighs the cost of the product purchased with a credit card.
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Credit Card Safety

Credit card information can be stolen easily, so do not let the credit card out of your sight in a store. If you use the credit card online, make sure the website is reliable and there is not anything suspicious on it. Check the activity of your credit card if you think there is anything suspicious going on.