By: Rachel Conley
Basics Of Credit
- What is credit?
Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. A Credit Score is a number assigned to a person that indicates to lenders their capacity/ability to repay a loan. The Credit Bureau is a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies.
- What are the forms of credit?
Credit Cards, a card issued by a bank or business allowing the holder to purchase goods or services on credit, and Personal Loans, establishes consumer credit that is granted for personal use, are all forms of credit.
- What costs are associated with credit?
The interest on your loans or credit is APR ( Annual Percentage Rate).
- What determines if someone gets credit and how much they get?
Your credit can be evaluated by a Lender, someone who lends money or gives credit, when looking at your Credit Report, which is a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy. Your Creditworthiness, trustworthiness with money as based on a person's credit history, determines it as well.
- Annual Percentage Rate (APR): interest on your loans or credit
- Capacity: financial ability to pay back a loan
- Capital: value of what you own
- Character: type of person you are
- Collateral: Something pledged as security for repayment of a loan
- Credit: ability of a customer to obtain goods/services before payment, based on trust that payment will be made in the future
- Credit Bureau: a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies.
- Credit Card: card issued by a bank or business allowing the holder to purchase goods or services on credit
- Credit History: record of an individual's or company's past borrowing and repaying
- Credit Limit: maximum amount of credit that a lender will extend to a individual for a particular line of credit
- Credit Rating (Score): is a number assigned to a person that indicates to lenders their capacity/ability to repay a loan
What You Need To Know: Credit Cards
● What is a credit card?
A card issued by a bank or business allowing the holder to purchase goods or services on credit.
● Where can you use credit cards?
Anywhere they accept them ( VISA, MasterCard, Discover, AMEX ); at a store or online.
● What are the benefits and costs of using credit cards?
Benefits: Cash back, Points, Payback later, Credit limit can raise, Interest Rate (APR)
Costs: Ruin credit, Bills, Annual Fees, Penalty Fees, Over-the-limit fee
Smart Consumers: Don’t Fall Into the Credit Card Trap
* If its your first one, try getting a low limit credit card. Make every payment so that over time, your credit score goes up and your limit does as well. This says a lot about your character.
* Dont pay the minimum payment on your credit card bill because it carries over to the next payment and this ruins your credit
* When you go somewhere like Macy's or Target, try not to apply for the store credit cards because this can ruin your credit as well.
* When you go to college, avoid signing up for a credit card because signing up for a school credit card messes up your credit as well.
So in general, just be smart, pay your credit card bills, dont ruin your credit if you want to buy the things you want in life!