Credit Newsletter

Marek Szetlak

The Basics of Credit

What is Credit? Credit is the ability to borrow money but, you have to promise to pay it back in the future!

Different forms of credit: Credit cards:

A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.

Loans: Personal Loans;

a loan that establishes consumer credit that is granted for personal use

What costs are associated with credit? Not Free. You have to pay interest (an annual percent rate)

In order to get credit you must prove that you are reliable and are able to pay back the loan you must show good creditworthiness.

How do you get this information? You must fill out a loan application , or go through theCredit Bureau who collects information on a consumers' credit (credit score)and than they sell it. The people who get this information are called lenders and they judge you on three factors character, capacity, and capital. These lenders may look at your credit history which is also called a credit report to determine if you are qualified.

Importance of Credit

In order to establish credit you will have to be 18. You should start small with a store credit card becuse they are easier to get approved. You will also need a CO-SIgner who is a person (most likely a family member) who you trust to pay your debt if you are unable to. That person will most likely have to endorse you which means they must let somebody know that they are going to support you. If you happen to use to much money on your credit card and overdraft your co signer will have to pay that bill

The Basics of Credit Cards

The most common type of cards are VISA, MasterCard, Discover, and AMEX

What do you get out of credit cards? Cash back, points, and airline miles

For regular charge accounts you must pay your bank balance in full

Cards that offer this: American Express

For revolving charge accounts you can carry the balance from month to month

Cards that offer this: Visa, MasterCard

Credit cards cost money! They are not free. You will have an annual fee which is required and you must pay it. You also have to pay Interest(APR) You will also have credit limitswhich is the amount you can spend when using your card, if you go over the limit (you are exceeding the amount of money you have) you may lose your card or have to pay a fee. You may have to pay up to $30 every time you go over the limit these are penalty fees.

Dont Fall into The Credit Trap

You should always know how much money is on your card. Make sure you dont go over the limit you have other wise their are fees that may add up at the end. They also get you by charging you at certain places. So if you use your credit card at an ATM somewhere their may be a transaction fee which you will have to pay for just using that certain ATM. You should read everything before you use or sign up for it.