Jocelyn Gutierrez Period 7/8
The basics of credit
Ability to borrow money in return for a promise of future payment.
What are the forms of credit?
Forms of credit: loans, credit cards, house, car and school.
What costs associated with credit?
Credit is not free, it must pay interest. Either APR or annual % rate.
What determines if someone gets credit and how much they get?
To be able to get credit you have to demonstrate creditworthiness. Meaning if your reliability to pay back a loan.
3 factors: Character, capacity and capital.
Character-sense of financial responsibility
- Steady job
Capacity- Financial ability to repay loan
- high enough income
- major expenses & debt
Capital- value of what you own
- savings, investment, property
- use capital to pay loan if needed
Credit Cards- cash back, points, airline miles
- Master Card
Regular charge accounts
- must pay balance in full
Revolving charge accounts
- can carry balance from month to month
Credit Score- a number representing the credit worthiness of a person
The higher the score the better it is
Effects on score
- On time payments
- Low debt
- Long history
- Limited # of credit cards
These are all good scores for credit
A card by a bank to purchase of goods or services on credit
Where can you use credit cards?
You can use credit cards anywhere they accept it.
What are the benefits and costs of using credit cards?
- required annual money amount you must pay
- 0% to 29%
- Pay entire balance by due date= no interest
- Max amount you can spend using cards
- Over limit= penalty fee or declined
- Approximately $30 for each charge made beyond limit
The good thing about credit is that it allows you to buy anything and it all impacts on the economy. The people with jobs are always able to spend more money. The more goods the more people make goods which equals to more jobs. The bad thing about it is that people overuse credit. If it decreases demand for goods it also decreases the need for jobs.
THINK WISELY AND DO GO OVER YOUR LIMIT :)