Ruby Lopez

Basics of Credit

Credit is borrowed money to purchase goods and services when you need them. To determine whether someone has good credit or bad credit is by credit score. Credit score ranges between the numbers 300-850. The higher the number, the more beneficial for a person to receive loans. To determine a person's credit, it is broken down into 3 factors: character, capacity, and capital. Character a sense of financial responsibility and paying bills on time, capacity is the financial ability to pay back a loan, and capital is the value of what you own.

Based on your credit report, it will determine whether you will be charged interest or not. In other words, pay extra than what you owe because it is borrowed money. Interest will go up if one does not pay the monthly bill on time or the set amount of money owed. In order for this to be evaluated, there is something called a credit bureau. It is a company that collects the individual's rating and makes them available to financial needs as in Personal Loans. Banks offer personal loans to customers and are usually for a car or home. Banks will charge interest for these loans because it is a large amount of money. Interest will differ if the person is creditworthiness. Creditworthiness is being reliable for paying the bills on time. To determine this, bankers have something that is called a credit report. It is the history of someone's credit.

What you need to know about credit cards.

A credit card allows you to borrow money on a monthly basis. They are very useful to pay for items anywhere around the world. They are useful for making payments over the phone and online. Some credit cards have something that is called Annual fee. It is a fee that is charged yearly for owning a credit card. A cost of owning a credit card is paying a penalty fee. A penalty fee is an extra charge after missing the monthly payment date. Another cost of owning a credit card is over the limit fee. A person has a limit to how many time or how much money a person spends on their credit card. To avoid an over the limit fee, companies set up a credit limit. It is a limit to how much you should spend. Different credit card companies are Chase visa, master card, discover, and american express. It is beneficial to have a credit card as well because it is good for emergencies.


Being safe with credit.

A person must learn how to be responsible with credit. This is determined by a person paying their bills on time and the minimum amount they owe. Having a low debt is beneficial for good credit as well as a long history and a limited amount of credit cards. A person who maintains a job will look good and have more credit. Having more credit allows you to purchase more goods. A person should not take advantage and overuse credit because that is what results in no job and low credit.