By: Jose Gonzalez

The Basics of Credit

What is credit? Credit is the ability to borrow money in return of promise of future payment. Your credit score is affected by this it can be a positive or negative effect. If you pay on time you start to build a good credit and if you don't pay on time your credit score can start to go down. Having a credit card is a good idea to build credit but you have to be smart and pay on time.You always want to have a good credit. Creditworthiness is worth keeping good because this is the ability to borrow money. The Lender will not lend money to those who don't pay back and have a bad credit score. If you have a personal loan then the borrower puts no collateral to guarantee the repayment. The credit bureau of your credit report which shows them all your past activity with late payments,missed payments, and a payment made on time they can also check if you filed for bankruptcy. There are three types of credit and they are: Loans, Installment loans, Credit cards.Some people may not know but there is a cost that comes with credit and that is Interest. People aren't going to let you borrow money for free so they put interest on it if you are late and don't pay on time.

Vocabulary Watch

Credit limit- is the maximum amount of credit that a financial institution will extend debtor for a particular part of credit.

Co-pay- a type of insurance policy where the insured pays a specified amount out of pocket expenses for health care.

Collateral- property that a borrower offers a lender to secure a loan.

Credit Cards What you Need To Know

What is a credit card? A credit card is a plastic card issued by the Store to pay for goods and services on credit. Getting a credit card can have some annual fees that come along with them. Some places can charge for having that card every year for example Sams Card doesn't let you in there store without having a card from there. This can help you save money.Where can you use credit cards? you can use credit cards in the stores they remain to or other places they are associated with. The benefits of having these cards are buying able to buy what you want if you don't have money on the spot. Some costs are having to pay the Interest rate if not payed on time. There is a Credit limit on these credit cards and if someone goes over the credit limit(fee) there is a fee. There is a penalty fee that happens when you don't pay off your amount owed to the company.

Smart Consumers

Some ways to stay safe from credit cards is TO PAY ON TIME. This is one of the biggest reason why people get into major problems with fees and interest rates. If you keep leaving your balance the money keeps on adding to the money you owe. Always plan out or have a calendar to mark a week before just to make sure it gets paid on time. Also make sure what your credit limit is and check it every time. Always have a notepad and mark down what you have bought. If you go over the limit there are penalty's and this just doesn't get any better or you. If you use a credit card just be careful and responsible with it because if you are then they can help you build your credit score as a young adult. This can benefit you in many ways later on in life.