Everything to Know About Credit
Section 1: The basics of Credit
Credit is the ability to borrow money and promising to pay for the payment in the future. The two forms of credit are personal loans and credit cards. Some costs that are required to be paid is an interest cost and this is the annual percent rate. In order to receive credit you must prove your creditworthiness. The lender judges based on your capital, character, and capacity. This information comes from the credit bureau that collects your info from your credit, makes your credit report, and sells it. They also make sure you have a good credit score before selling it to you. The higher the score the better.
Section 2: Vocabulary Watch
Creditworthiness- having reliability in the person to pay back a loan
Assets- any item of value that the person owns
Creditor- lender; one to whom money is owed
Interest- amount paid for the use of borrowed money
Interest Rate- percentage of the principal that the borrowed paid for the amount of money that was borrowed
Section 3: Credit Cards
A credit card is a plastic card that is issued by the bank to purchase goods or services on credit. They can be used anywhere as long as the person stays within their credit limit. If this limit is passed then their could be a credit limit fee that you will be charged with. Then this will also mean that you can be charged also with a penalty fee because payments weren't paid on time. The benefits to using a credit card is to begin to establish credit to be used in the future. Although you establish credit there is an annual fee that is required to be paid at the end of the year.This could be from $15- $100. Another cost that could occur is an interest rate. If full amount of balance is paid by due date then that will mean you get no interest rate charge.
Section 4: Smart Consumers, Don't Fall into the Credit Card Trap!
Some things to remember when using credit cards is to NEVER give away your information. Also make sure to memorize your pin and NEVER write it down anywhere. Always make payments on time to prevent yourself from owing more than you were supposed to. Lastly, make sure no one uses your card but you & be a smart consumer. (: