Credit Newsletter

By John Glowinski

The Basics Of Credit

What is Credit?

Credit is the ability to borrow money with the promise of future payment. Credit is used with credit cards which helps you buy something now and then pay for it later and improves your credit score and shows the bank your creditworthiness so you can get better personal loans from a lender. As you get a better or worst credit score the more your interest rate will go up or down.

What are the forms of credit?

The forms of credit are Installment Credit which allows you to borrow money with the promise of paying back. There is Revolving Credit which allows you to borrow the same amount of money as long as your account is good. The last form is Open Credit which is for the borrowed money to be paid fully every month. These forms are beneficial with your credit report.

What costs are associated with credit?

The costs are any type of fees like late fees, paying bills on time, buying a house, or purchasing a vehicle.

What determines if someone gets credit and how much they get?

The credit bureau keeps track on how your credit is. They keep track of how much you spend and how often you're late on paying your bills.

Vocabulary Watch

Collateral is when something is pledged as security for repayment of a loan.

Credit History is when credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repayment.

Credit Limit is when the maximum amount of credit that a financial institution or other lender will extend to a debtor

Credit Cards: What You Need To Know

What is a Credit Card?

A credit card is a piece of plastic given to you by your bank. It does have penalty fees like not paying your credit card bill on time. The bank offers you annual fees and even a credit limit. When purchasing something with the card you have to pay an interest rate. If you go over the credit limit you have to pay an over - the - limit fee.