What is Credit?
The Basics of Credit
Credit allows you to use money that you may not have, in return for a promised payment in the future. There are many different types of credit. The one most used is a credit card. Credit Cards allows you a 5,000 limit. With this card you are allowed to pay, with time, and it builds up something called a credit score. A credit score ranges from 300-900. The higher the score, the more creditworthy you are. Your credit score is based off of your credit report. This shows the history of how well you are when it comes to paying back borrowed money. The Credit Bureau is a company that collects the individual scores and sends it to credit card companies. Making individual payments also bumps your credit score. This will determine how much credit a person should receive. Another form of credit is a personal loan. The interest in this loan is higher than most. This is because it is an unsure loan, which means the person receiving the loan does not pay collateral or any security to guarantee the payment of the loan.
A report that shows history on how well you do with your credit payments.
When an individual has money lent to them, they must pay regularly and at a particular rate.
A plastic card issued by the bank where you can purchase items on credit.
What You Need to Know!
Credit cards is a piece of plastic issued by a bank that allows you to make a purchase on credit. (borrowed money) Credit cards can be used anywhere! Credit cards have credit limits. This limits how much a person can borrow. The benefits to having this card is that if you want to purchase something you can't afford at the moment, you can purchase it with credit and pay monthly + interest to get what you want right then and there. When you take out a loan, you receive a yearly interest payment called APR. When you pay your credit card late you will receive a penalty fee. This also lowers your credit score.
Don't Fall Into The Credit Card Trap!
It is important that you are smart when it comes to credit. You must make sure you are responsible and pay your payments on time! Also, the sooner you pay off your payments, the better! Never get anything that you don't think you can afford.