Marisol Sepulveda

Basics of Credit

What is credit? The ability to borrow money in return for a future payment.

What are the forms of credit? The two forms are Personal Loans and Credit Cards

What costs are associated with credit? Since credit isn't free you have to pay interest on it.

What determines if someone gets credit and how much they get? Determining if you get credit is called creditworthiness. The lender looks at your credit report provided by the credit bureau. If you have a good credit score they will give you a loan.


Creditworthiness-trustworthiness with money as based on a person's credit history

Credit Score-A number assigned to a person that indicates to lenders their capacity to repay a loan

Credit Bureau-A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies

Credit Cards

What is a credit card? A card you use to purchase things on credit.

Where can you use credit cards? You can use them in stores and online.

What are the benefits and costs of using credit cards? You get an annual fee for having the card. Also you pay interest but if you pay on time you don't pay any. If you go over your spending limit you pay over-the-limit fee. You might have to pay a penalty fee if you're late or go over limit. The credit limit is how much they let you spend on the credit.

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Smart Consumers

Tips for using a credit card

  • choose a a card that gives you benefits
  • control your spending (set limits)
  • don't have too many cards
  • don't miss payments
  • don't sign up for cards for free stuff
  • read card contracts before signing