Credit Newsletter

Anthony Torres, Period 2.

What is credit?

Credit is when you agree to borrow money from the bank, but in return pay that amount back, and a little more in interest. If you keep up with your payments you will have a better credit score and be able to get better loans with a higher score. A Credit Bureau makes your credit report of companies to see. They see how you make your payments and give you a credit score based on that, which determines your credit worthiness that can affect your APR, lenders, credit cards, and personal loans. APR is your annual percentage rate. Some lenders might not lend to you if your credit score is low, or they might give you a higher APR. Some companies might not even give you a credit card if they don't think you're responsible enough to pay them back on time. Also, you might not be able to take out any personal loans for the same reason of not being able to pay them back in time, or you might get a really high interest rate.

What are the forms of credit?

Installment Credit

  • You borrow money and agree to pay it back with an equal amount each month

Revolving Credit

  • You pay for what you spend, and can spread it out over a period of time and pay an interest rate or fee

Open Credit

  • All the money you use must be paid in full at the end of each month

What you need to know..

Some credit card companies have an annual fee ranging from $15-$300, but some companies have no annual fee at all. You can use a credit card almost anywhere in the world. Some credit card companies don't let you use your card across the world, so that might cost you a penalty fee. You could get penalty fees by not paying on time, going over your limit, or many other ways. A credit limit is a limit set by the company that you aren't allowed to go over, because they don't think you're worthy enough to pay a higher amount back. Any penalties that you get might cause your APR to go up, which means you would have to pay more in interest.

Safe Credit

Ways to be safe with credit are to always pay on time, don't go over your credit limit, and don't spend more than you can afford. People who spend more than they can afford often go into debt. They go into debt because they can't afford to pay the bill, so they get late fees, and their interest goes up and the bills just keep piling up on them so try not to spend more money than you can afford at the end of the month.