Credit Newsletter

By: Victoria Valentin

The Basics of Crediting

Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender some later date.


Your credit bureau will help you determine which type of credit is best for you. There are many types of credit such as secured or unsecured loans, student loans, installment loans, personal loans, etc. But credit cards are perhaps the most common types of personal credit.


There are many costs and benefits some being.....

Costs

  • Overuse
  • Paperwork
  • High-cost fees
  • Unexpected fees
  • Deepening your debt

Benefits

  • Convenience
  • Record keeping
  • Low-cost loans
  • Instant cash
  • Perks
  • Build positive credit


Your credit can be affected by whether you pay your bills on time, how much debt you have, the length of your credit history, how many new accounts you have, etc. One or two late payments is put down on your credit report and can significantly affect you credit score.This determines your creditworthiness and whether the person is eligible for a higher interest(APR).

Credit Cards: What you Need to Know

A credit card is issued by the bank, business, etc.., allowing the holder to purchase on credit. The annual fee of credit is charged at the end of the year with the interest rate(APR).


But there is a credit limit to a card, or the maximum amount the company will allow someone to borrow. If someone goes over that limit they are then charged with an over-the-limit fee. There are many other fees besides that one, for example, if a card user fails to follow the terms and conditions of the credit card they are then charged with a penalty fee.


Credit is usually the best option over debit when you're shopping online, making large or electronic purchases, or if you're going to travel. This is because credit cards can offer more warranty and fraudulent charges.


There are many costs and benefits to using just credit cards some being.....

Costs

  • Feel compelled to spend more money than they actually have
  • Late fee charges
  • Credit card debt can ruin credit score

Benefits

  • They can be used almost anywhere
  • Financial backup in an emergency
  • Cash back
  • Build credit history

Smart Consumers: Don't fall into the Credit Card Trap

Using credit wisely can save you from having problems in the future with bad credit history. First, you must read all the application materials carefully. Especially the fine print because you don't want to agree to something without knowing the full information.

Try saving your credit card for emergencies only so you don't spend more than you actually have which will cause tremendous debt.

You must pay bills on time in order to keep the debt down and maintain a good credit history.

The key to success in credit is to not fall for the hidden mistakes that everyone makes and build a good credit history.