Credit Newsletter

By: Autumn Berg

What is credit?

The ability to obtain goods or services before payment, based on the trust that payment will be made in the future.

Forms of credit:

  • Secured: With this kind of credit, the creditor guarantees that it will be paid back by putting a lien on an asset you own. An example of this is car loans and mortgage.

  • Unsecured: When your credit is unsecured, you simply give your word to the creditor that you will repay what you borrow. Credit card, medical, and utilities bills are all examples of unsecured credit.

  • Revolving: If your credit is revolving, the creditor has approved you for a set amount —your credit limit — and you can access the credit whenever you want and as often as you want. In return, you must pay the creditor at least a minimum amount on your account’s outstanding balance each month. An example of this is a credit card

  • Installment: With installment credit, you borrow a certain amount of money for a set period of time and you repay the money by making a series of fixed or installment payments. Examples of installment credit include mortgages, car loans, and student loans.

What costs are associated with credit?

Interest (APR): depends on the principal, time, and the rate charged.

How is your credit score calculated?

The credit bureau studies peoples' payment patterns or creditworthiness. They look at things like late payments, kinds of credit, home ownership, how long you'd had credit cards, and the ratio of debt to available credit. They learned which factors are good predictors that you're likely to pay your bills. Then they assigned numerical values to those predictors and created statistical models.

Vocabulary Watch:

Credit Bureau: A company that collects the credit ratings of individuals and makes them available to credit card companies, etc.

Interest (APR): the percentage of a sum of money charged for its use.

Credit Report: A record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy.

Credit Cards

What is a credit card?

A plastic card issued by a bank or business that allows you to purchase items on credit. (Buy now, pay later)

Where you can use credit cards:

Anywhere, but you should only use them if you have the money available at a different location. Should only be used in emergencies.

Benefits & Costs


Convenience, helps budget expenses, can improve credit score


Annual fees: some credit cars charge a yearly fee

Interest rates: a rate that'll be charged to each purchase

Penalty fees: if you pay late, outside the grace period

Over the limit fee: when you spend over the credit limit

Ways to stay safe when using credit cards:


  • Do make wise decisions about purchases
  • Let creditor know in advance, if you cannot make a payment in time
  • Stay within 30% of your credit limit
  • Negotiate interest rate


  • Use credit cards to make every day purchases
  • Get into habit making minimum-only payments
  • Use credit cards to buy things you cannot afford
  • Close out a credit card without knowing how your credit will be impacted