Credit Newsletter

Isidro Diaz

Section 1: The Basics Of Credit

Credit is the ability to borrow money while promising to pay it later with interest. The two forms of credit are personal loans and credit cards. Most of what credit is used to purchases are car, house, and school payments. Loans are given out by lenders who determine if you’re eligible for the loan by your credit score and information they get from the credit bureau. Your credit score is determined by whether or not you make your credit card payments on time. Your creditworthiness is what determines whether you get credit and how much you could use. Creditworthiness is determined by capital (value of what you own), capacity (your ability to pay off a loan), and character (sense of financial responsibility). After you use your credit card you will start a credit report which keeps track of all the times you used credit for a payment and your credit score.

Section 2: Vocabulary Watch

Lender- person who determines whether or not you are eligible for a loan or not.

Interest- a percentage of a payment you have to pay in addition to the price of the original payment

Credit Report- a history of purchases using credit, credit information, and credit score

Section 3: Credit Cards: What You Need To Know

A credit card is a card you use to make purchases with credit and pay them later. You can use credit cards anywhere they are accepted like restaurants or stores. Incentives to use a credit card are cash back, points, or airline miles. There are annual fees that you have to pay to have a credit card that you must pay annually. Also, there’s a credit limit depending on your creditworthiness on how much credit you can use on a credit card. If you go over the limit you may have to pay a penalty fee. A penalty fee could be due to late payment, going over your limit, or a returned payment. The penalty fee when you go over the limit is the over-the-limit fee. All this affects your interest rate and could make it go up so you have to pay more to use credit.

Section 4: Smart Consumers: Don't Fall Into The Credit Card Trap

  • Pay the credit card bill fully to avoid minimum payment traps

  • Only have one credit card to avoid a bad credit score

  • Use for emergencies only

  • Know your credit score

  • Avoid smaller credit card companies to avoid Identity Theft