The Basics of Credit
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
The Basics of Credit Cards
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.