Credit

How it Works

Basics of Credit

Credit is the ability to borrow money with the promise of future payment (Buy Now, Pay Later)

Getting loans, having credit cards, buying a house, having a car and paying for school or personal loans are all forms having to do with your credits.

Credit is not free though, you must pay interest (APR)

you must be able to pay things back, that is how you build you Creditworthiness. Lenders judge by the 3 factors: Character, Capacity, Capital.

The Credit Bureau collects info on consumers credit, they have records of every adult and assign their credit rating

What you need to know

Credit Cards

credit cards are regular charge accounts, you have to pay in full, you also have to pay a balance from month to month. VISA, MasterCard, and Discovery are cards you might of heard of. There is an Annual fee, interest rates, over the limit fees you have to watch out for as well as penalty fees.

you're introduced to Credit when you 18, Store credits are easier to get approved but anywhere you decide to throw in Credit you have to have a CO-Signer, the person that will be responsible to pay debt if the original payer fails.

Credits allows more consumer to buy, people with jobs are able to spend more money.

Don't fall into the Credit Card trap

consider a loan instead of credit cards, pay credit card balance in full, choose you card wisely, assure that you read the contract, avoid too many cards, don't miss payments.