Credit Newsletter

By: Phillip Sopt

The basics of credit

Credit is essentially money you don't have. The way credit works is you obtain a good before you actually pay for it. There's something called the credit bureau, essentially they are in charge of keeping track of your credit score by looking at your past financial documents and your ability to pay them.


Lenders have two different ways of using credit. They can use Personal Loans or Credit Cards. When you use credit cards to purchase goods you are charged an interest rate when paying the credit back.


The way lenders choose who to lend credit cards to is my reading your credit report which reflects your creditworthiness, and your creditworthiness reflects your credit score. Your creditworthiness determines how much credit you can redeem.

Vocabulary Watch

Credit Cards: What You Need to Know

Credit cards our small plastic cards that consumers can use to purchase goods using credit. You can use credit cards anywhere debit cards are accepted. Credit cards can be a very powerful tool however they can also be hurtful.


The benefits using credit cards is that if you need to purchase something now and you know you will have money in the future to buy it you can use credit cards. However credit cards can put you in debt if you are an impulse buyer. You can end up spending more money than you think you have using credit cards.


Most credit cards don't have annual fees, however if they do annual fees are simply the cost of owning the credit card whether you use it or not.


Each credit card has a set credit limit and if you go over the limit there is an over the limit fee that you must pay. Every year you are billed for purchasing things with the credit card and on the bill is the total amount of the goods purchased and an interest rate or APR. If the consumer fails to pay the bill before to do you will be charged a penalty fee.

Don't Fall Into the Credit Card Trap

Here are some tips to using your credit card correctly:


-Pay the fees on time

-Don't go over your credit limit/keep track of your credit limit

-Use the credit cards sparingly

-Do not use credit cards to buy things you cannot afford

-Do not use your credit card for every day buying

-Review your credit card statement every month