Do You Really Know About CREDIT?

By: Alexis Ortega

The Basics of Credit

What really is Credit? Well, credit is the ability to borrow money in return for a promise of future payments. Also known as, “buy now, pay later”.

There are many forms of credit, some are personal loans, school loans, credit cards, etc. The amount of credit you earn is based off your credit score. Your credit score is based off how often you pay your bills on time. The Credit Bureau keeps records of all your credit reports.

There are many benefits for using credit, you are able to buy now and pay later. This is, of course, if you are creditworthy. You can buy a house, new car, pay for college tuition with loans based off your credit. Sadly, there are also cost when it comes to credit. When paying back your loans, you are hit with something called APR (annual percentage rate). This is the amount of interest you owe based on the amount you have been received. This means that you have to actually pay more than the lender has given you.

What determines your credit and how much you get? The Credit Bureau reports all your credit info to lenders. This info reports your credit score, which ranges from 300 (lowest) to 850 (highest).

Credit Cards: What You Need To Know

What Is a Credit card? A credit card is a small plastic card that is issued from your bank, or business, that allows you to buy goods on credit.

You can use your credit card almost anywhere, but you have to be careful with your cards annual fees, credit limit, APR, credit limit, and over-the-limit-fee. All these tie into one another and can really make it stressful to live off credit.

Even with all of that, the benefits for using a credit card can be worth it. Sometimes a bank doesn't have any annual fees or APR. These fees can occur when you forget to pay your credit bill back on time. The costs for a credit card is that you may be hit with a fee because you have spent more than your credit limit. This limit is a set amount of money you can spend on credit.

Shopping for Credit

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Smart Consumers: Don’t Fall Into the Credit Card Trap

Here's a few tips you should always keep in mind

1. Always educate yourself about the type of credit card you will be using

2. Spend in your means

3. Learn about card benefits

4. Always examine your credit reports and statements

5. Always pay off your credit debit