All about Credit

by Dominika Mac

The Basics of Credit

What is credit?

When a customer makes an arrangement to get money now and pay back the money for the future. Based on your credit score it shows lenders your financial history and if you able to pay back on time.

What are the forms of credit?

Loans- help Customer's buy purchases that they cannot afford such as a home or car but must be repaid with interest. The Credit Bureau is an agency that will makes the decision to grant you a loan based on your credit history.

Credit Card- A card that has a credit limit which means you can only spend the amount that is on the card. Each time you buy something on the credit card you borrow that money and owe that money at the end of the month. If you don't pay at the end of the month you will be charged interest

What are the benefits of using credit cards?

  • convenient
  • safeguard
  • buy large purchases
  • emergency situation
  • instant cash

What are the disadvantages of credit cards

  • Overuse- credit makes it easy to spend beyond your means
  • Increased cost because of interest
  • Anual fee's

What determines if someone gets credit and how much they get?

Depending on a customers creditworthiness; the ability to borrow money and pay bills on time the customers credit limit will go up because of their good credit report and trust.

What You Need to Know

Where can you use credit cards?

  • Must be at least 18 years old
  • Retail store
  • Gas Stations
  • Online purchases
  • etc.

Don’t Fall Into the Credit Card Trap

What is Debt?

Debt is when a customer of a credit card purchases an item or service through the card system and cannot pay off what they bought at the end of the month. Interest is then added to the money you owe and you can be paying off more money then the item you purchaced

Tips to Avoid Debt

  • track your costs
  • create a budget
  • If you have debt to pay, pay more than the minimum
  • have an emergency fund
  • Pay your balance in full every month