The Basic of Credit

Credit is money that the bank allows you to borrow in order to buy products before pay the lender back, some people get more credit than others because they have a good record paying them back and the bank trusts them.

There's 3 types of credit, personal loans, installment loans, and credit cards. Personal loans must be payed off with interest, installment loans are payed of in monthly payments, and credit cards are payed of by paying an amount of money each month until you pay of the money you have borrowed. You will not be able to borrow any credit if you're not considered creditworthiness. If you do not completely pay all your bills then that will affect your credit score and could lower it down, credit score runs from 300-800.

When borrowing money from a bank you are "renting" their money so you will have to pay interest. The longer you take to pay back the "rent" you will end up paying more money on interest.

Your credit score is what determines if someone could get credit and how much they will get. The more responsible you were buying paying your bills on time the more likely you will get more credit.

Vocabulary Watch

Credit Cards: What You Need To Know

A credit card is money that you borrow from the bank and each month you get a bill that you pay them back. You can use credit cards pretty much anywhere, when shopping for groceries, clothes, in the gas station, or even online.

The benefits of having a credit card is that you don't have to use your own money at the time and if you pay all your bills, your credit score can go up, you also don't have to carry money. Credit cards have a credit limit that you have to follow, if you pass your credit limit you will have to pay some over the limit fees.

The cost can be harmful, if you don't pay your credit card bills then your % interest can go up, can lower you credit score, and you can also end up in debt.

Smart Consumers : Don't Fall Into the Credit Card Trap

A safe way you can use a credit card is buy not over using it, you should only use it for emergencies. When you get your credit card bill you should always pay it and never fall behind or you can fall into debt.