Newsletter

By: Victoria India

The Basics of Credit

What is credit?

  • The ability to obtain goods or services before payment, based on the trust that payment will be made in the future: "unlimited credit".

What are the forms of credit?

  • Installment Loans: are issued by lenders on the basis of credit worthiness with a fixed repayment schedule.

  • Credit Cards: are issued by a variety of lenders. This can include your bank where you keep your checking and savings accounts, or a lender that solely deals with credit cards.

  • Merchant Charge Cards: are extended by retailers for explicit use in their stores.

  • Lines of Credit: are extended by a variety of credit grantors.

  • Mortgages: are issued to assist consumers in purchasing a home. Unless you are an independently wealthy person, you will need a mortgage for the purchase price of a home. There are several types of mortgages available that a consumer may choose from

What costs are associated with credit?

  • Credit is not free, you must pay interest. (APR or annual % rate)

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

  • Your credit score all depends on your credit worthiness or your credit report you show to your lenders.
  • They look at Capital, Character, and Capacity. They see if you are capable of paying them back, what you own on personal loans, your income, dependability, and major experiences and debt.
  • However if you fail to do whats excepted of you they Credit Bureau you.

Vocabulary Watch

These are three very important vocabulary term that you need to know!:

  • Credit Bureau: Collects information on consumers credit and sells it.
  • Credit Report: A record of an individual's or company's past borrowing and repaying
  • Credit Score: A credit score in the United States is a number representing the creditworthiness of a person, the likelihood that person will pay his/hers debt.

Credit Cards: What You Need to Know

What is a credit card?

A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale at your own personal credit limit with annual fees.

Where can you use credit cards?

you can use a credit card at any store that are accepted at.

What are the benefits and costs of using credit cards?
The benefit of a credit card is being able to buy something and paying it off in payments later. However, you have to beware of Penalty fees because if you spend more credit then you were given then you get a over-the-limit fee that causes you to get bad credit, and also has an Interest Rate (APR) that comes with getting a credit card.

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

Ways to use your credit card in a good way is by only using it when you need it the most. A lot of people take advantage of there credit card and end up getting caught in debt very easily. You should look at your finances before hand and see a price range where you can handle it at.