iCredit

Daniel Wolski

The basics of credit

Credit is borrowing money from a lender, and then paying it back plus interest. There are 2 types of credit, loans and credit cards. A personal loan is usually a larger amount of cash that you pay over time, a credit card is a card that you can use to buy smaller items and pay them off a month at a time. You pay interest on credit, meaning that you pay more than you get loaned. There are 3 factors used to determine your credit score.They are capacity, capital, and character. Once a year you can request a credit score from the credit bureau.

What you need to know about credit cards

A credit card is a card that you can use to buy things with your banks money. You then pay the bank back in monthly payments. You can use credit card online, at most stores and at ATMs. Credit Credit cards can be useful but they do have their downsides, there is a interest rate on the money and penalty fees if you don't pay in time, and some even have annual fees. Credit cards also have a credit limit and if you go over it you need to pay a over-the-limit-fee.

The credit trap

Credit can be useful, but you need to be responsible while using it. A lot of people have dug themselves in a hole with credit and are thousands of dollars in debt. When using a credit card make sure that you only buy what you can afford, and pay off the credit card every month. Other wise the late fees can pile up.