Get to know Credit.

Christina Calvillo

Section 1: The Basic of Credit.

What is credit?- Credit is the ability to get goods or services before payment, based on What they bought.

What are the forms of Credit?- There are three types of credit- Installment Credit is a type that you use to borrow money and pay the equal amount over time. Then there is Revolving credit allows you to borrow pre-established amount and Open Credit is type of credit that all money borrowed must be paid in full every month.

What costs are associated with credit?-

What determines if someone gets credit and how much they get?- Their Credit score will determined how much they should get.

Section 2: Vocabulary Watch.

Words you should know.

The 4 C's of Credit!:

Character- Refers to the financial history of the borrower; that is, whet kind of "financial citizen" is this person or business? Character is most often determined by looking at the credit history, particularly as it is stated in the credit score

Capacity- The ability of the business to generate revenues in order to pay back the loan. Since a new business has no "track record" of profits, it is riskiest for a bank to consider.

Capital- Capital refers to the capital assest of the business. Capital assets might include machinery and equipment for a manufacturing company, as well as product inventory, or store or restaurant fixtures.

Collateral- cash and assets a business owner pledges to secure a loan. In addition to having good credit, a proven ability to make money, and business assets, banks will often require an owner to pledge his or her own personal assets as security for the loan

Section 3: Credit Cards: What you need to know:

What is a Credit Card?- A card that the banks provides for you and you will be able to purchase goods as long as you promise to pay the bank back.

Where can you use a credit card?- You can use them mostly everywhere they usually have a sign saying "Accept Credit/Debit Cards"

What are the benefits and costs of using a credit card?- Benefits- Provide the opportunity of buying now and paying it later, the safe feeling of not carrying cash around, another one is Interest Rate it tells you what is your over all interest rate and it might be a good rate or a bad rate. Costs- Annual fees you will get charged for the stuff you bought and if you don't pay it on time it will go on your credit report. Another costs is Over-the-limit-fee and that means over time you will be a fee because you didn't pay for that other fee on time.

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Section 4: Smart Consumers: Don't fall into the Credit Card trap.

Ways to keep you and your credit card safe- First and fore most keep your credit card in a purse of wallet and keep it close by you where ever you go. If you get anything in the mail with your credit card number or anything with you personal information, shred it until its hard to read, I recommend getting a paper shredder. Don't sign blank on a credit card recipients. Avoid giving out your personal information.
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