The Use Of Your Credit Responsibly

The Basics of Credit

Credit is having the ability to borrow money in return for a promise of future payment.

There is two types of credit that you must know, there's credit cards and loans. With credit, you will need to pay an interest, since it's not free. This means that you will pay an annual percent rate every year.

What determines if someone gets credit and how much they get is by their creditworthiness,meaning if you have the ability to pay back a loan. Character, Capacity, and Capital are 3 factors that lenders look for when it comes to letting someone borrow money.

Credit Bureau is is when information is being collected on consumer's credit and sells. This has a credit of every adult that has credit. It records if you've missed a rent payment, if you've been sued, if you have gone to bankruptcy, etc.It also assigns you credit rating, your score. The number that reflects your creditworthiness and if you have the ability and the willingness to pay everything on time.

Credit Cards: What you NEED to know

Credit Cards regularly charge accounts or revolve charge accounts. Regular meaning you must pay the full balance and revolving meaning you get to pay from month to month. Credit cards will charge you an interest every time you have a late fee, penalty fee or if you go over your limit.Some benefits that credit cards allow you to do is that you can use them in almost every store and purchase more goods.

Smart Consumers: Don't fall into the Credit Card Trap

Just because the credit cards give you more opportunities to spend more money doesn't mean that you are going to exaggerate. When it comes to having a credit card, you must choose a card wisely. Pick a card that has a least expensive and that gives you more benefits. It's better if you only have 1-2 credit cards.Avoid having too many because you can get into a big trouble and you will probably end up paying a lot of interest. Every time you use your card, make sure you read the terms and sign after you agree.

Vocabulary Watch

Credit-borrowing money and paying afterwards

Interest (annual percent rate) - A yearly fee charged by credit grantors for the privilege of using a credit card.

Creditworthiness-the reliability to pay back a loan