The Importance of Building Credit

By: Elizabeth Reyes-Perez

The Basics of Credit

Credit is when you borrow money. One form of credit is student loans. Student loans is offered to college students and their families to help cover the cost of higher education. There are two types of student loans. One is federal student loans, which is better because they usually come with lower interest rates and more friendly repayment terms. The other one is private student loans which is not funded by the government . They also don't offer flexible repayment terms. Anther form of credit is personal loans. It can be used without having a designated purpose. For example, it can be used to pay credit card debt or reduce your interest rates by transferring balances. Personal loan terms also depend on your credit history.


Some of the costs are you need to save your receipts. That's a good way to ensure that you haven't been overcharged. You can also end up spending more than the money that you have. If you have too much credit card debt, it can ruin your credit score. Some benefits are, its convenient. Which means you don't have to carry a lot of cash in your pocket. You get instant cash, build a positive credit, and it helps you keep track of your expenses. It can also help you raise your credit score.


What determines if you get credit is, when you apply you complete an application form that tells the lender your credit history. It also determines how much creditworthiness you are. Creditors see if your credit score is high or below the threshold level. Then decide if they should lend you or charge you more if they don't agree to lend.

Credit Cards: What You Need to Know

Credit cards are a small plastic card that's given by banks and businesses. It allows people to buy goods or services on credit. You can make purchases almost everywhere, but you got to be careful. You can only spend up to your credit card limits. If you pass the limit your purchase may be declined.


A disadvantage is that the bank can see a credit report of your credit card. The credit report is created by the credit bureau. It shows the money that you have spent and where you spent it. When you spend too much, you can end up with a credit card debt. If you don't pay the debt as soon as you can, interests will start to compile. Which means that your debt will keep on growing. An advantage is that some credit card companies offer rewards. For example, you can get a low or 0% interest for the first month/year, travel service, and reduced or no monthly/yearly fees.

Shopping for Credit

Discover vs Capital One-Visa credit card.


The advantages of Discover credit card is they don't charge you annual fees, 0% intro APR for 6 months on purchases, no late fee on your first late payment, and cash back rewards. If you're a student you can get $20 cash back each school year if your GPA is 3.0 or higher. You can also get no over limit fees. A disadvantage is if you don't pay your fees after your first one then you're going to have to pay penalty fees. Which is $25-$35.


Link to Discover: https://www.discovercard.com/application/displayLanding?pageFileId=double-listingsite_student&sc=RJRY&cmpgnid=ls-dca-cj-nerd-student-it-rjry-dtop&aid=12460405&pid=3842381&sid=8b7af5a86ac49bb3


Some advantages of Capital One-Visa is you don't get an annual fee, you get access to a higher line, and no foreign transaction fees. It also comes with 24-hour travel assistance service benefits. You get an extended warranty, auto rental unsurance, and travel accident insurance. You can have a 20.24% APR for purchases and transfers. Some disadvantages are penalty fees can be up to $35 and the credit limit is $300-$3,000


Link to Capital One-Visa: https://www.capitalone.com/credit-cards/journey-student/?Log=1&EventType=Link&ComponentType=T&LOB=MTS%3A%3ALCTMMQC4S&PageName=29&TargetLob=MTS%3A%3ALCTMMQC4S&TargetPageName=Student+Rewards+Card+Details&referer=https%3A%2F%2Fwww.capitalone.com%2Fcredit-cards%2Fgateway&external_id=CJA_ZZ12050274_USCCJ_K3842381_287e1c32adcfabb3

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

Here Are Five Tips:


1.Pay Off Your Credit Card Debts


As soon as you have a debt you should start paying it off early because if you wait the bank will start putting interests.


2. Learn About Credit Card Rewards

Try to learn the benefits that your credit card offers. You never know when they might come in handy.


3. Use Your Credit Card For What You Need

Think about the credit card as a loan and then pay back the amount before interests start to stack up. You can use your credit card for emergencies.


4. Don't Exceed Your Credit Limit

If you exceed your credit limit it can affect your credit score and you don't want that. You want your credit score to stay healthy.


5. Use Your Credit Card Responsibly

When you get a credit card don't go crazy and start making a lot of purchases. By doing that you can end up with a debt and with things that you probably won't need. If you stay within your budget and you pay all your bills on time, you'll be good.