Credit Newsletter

By Ousmane F.

What Is Credit

Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date

What are some forms of credit?

  • Student Loans

  • Car Payment

  • Mortgage

  • Credit cards

What is a credit card?

A credit card allows you to borrow money from your bank to make your purchases.

What determines if someone gets credit and how much they get?

A person's credit score is extremely important, as it determines his or her eligibility for all kinds of financial endeavors, such as credit cards and home loans. Some people have difficulty adjusting their scores because they are not sure what the number is based on. A specific formula is used to determine the score, and it's based on whether the person pays bills on time, how much debt he or she has, the length of his or her credit history, how many new accounts the person has, and the diversity of the credit accounts. Knowing what criteria go into the number on a credit report can help a person maintain a good score and qualify for higher limits and better rates on loans.
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Advantages And Disadvantages Of Credit Cards

Advantage: Convenience--Credit cards can save you time and trouble--no searching for an ATM or keeping cash on-hand.

Disadvantage: Overuse--Revolving credit makes it easy to spend beyond your means.

Advantage: Record keeping--Credit card statements can help you track your expenses. Some cards even provide year-end summaries that really help out at tax time.

Disadvantage: Paperwork--You'll need to save your receipts and check them against your statement each month. This is a good way to ensure that you haven't been overcharged.

Advantage: Low-cost loans--You can use revolving credit to save today (e.g., at a one-day sale), when available cash is a week away.

Disadvantage: High-cost fees--Your purchase will suddenly become much more expensive if you carry a balance or miss a payment.

Advantage: Instant cash--Cash advances are quick and convenient, putting cash in your hand when you need it.

Disadvantage: Unexpected fees--Typically, you'll pay between 2 and 4 percent just to get the cash advance; also cash advances usually carry high interest rates.

Where can you use credit cards?

  • Gas
  • Groceries
  • Other Services

Tips To Use Credit Cards Wisely

  • Pay the full balance each month
  • Don’t spend more than 30% of your limit
  • Set up auto-pay to avoid late fees
  • Only sign up for one card
  • Pick a card with rewards