The Basics of Credit

By: Kevin Jaques

What is Credit?

Credit is the ability to obtain goods or services before payment, based on the trust that payment will be made in the future. There are different types of credit a person can receive, from Car loans, to School loans. There are some costs that come with credit. APR is the percentage charged extra from the loaned money. In order to be eligible for credit, you must be creditworthy. You must pay your bills on time and not pass your limit.

Credit Lingo

  • APR (Annual Percentage Rate)- The percentage you pay extra from the amount loaned
  • Credit Score- A number that tells banks if you are a creditworthy person.
  • Over-the-limit fees- An amount of money charged if you exceed your limit.

Credit Cards: What you Need to Know

Credit cards are good to have in case of an emergency or if you are making a big purchase. When you make a purchase, you have to pay a percentage to the bank. That is your APR (Annual Percentage rate). You pay APR from the amount of the purchase you made. There is a limit for the Credit Card, so if you go over, you get charged an Over-The-Limit fee. Also, in some credit cards, there is an Annual fee. Credit card can be used wherever they accept debit/credit cards.


Credit Cards: Tips

Here are some tips that will make you think twice before swiping your credit card:


  • Always Pay your bill on time: Don't wait to pay your bill. Always pay on time. There are penalty fees and late charges for being late with your pavement.
  • Don't go over your limit: over-the-limit fees will apply.
  • Don't apply for too many credit cards: Having too many credit cards can affect your credit score, and besides, do you really need all those credit cards? NO!