Education on Credit

Basic of Credit

Credit is the ability to borrow money and promise to pay it back. Some forms of credit are loans and credit cards. You would usually take out a loan for more high priced items such as a house and a car. For credit cards, you would use them also for high priced items, but not like a house or car, more for furniture, which you would pay off month to month. However, it might be great that you're able to pay off the item month to month, but you do have to pay interest; you'll end up paying more than the items worth. To get credit, you have to show creditworthiness. Lenders will judge you on 3 factors: capital, capacity, and character. The information comes from the Credit Bureau. They look at your credit report that will provide them with your credit score to see if they can trust that you'll pay the bank pack.

Credit Vocabulary Terms

Basics of Credit Cards

What You Need to Know

A credit card is a plastic card that you use to purchase goods and services on credit. You can use credit cards almost anywhere to pay for items that you'll pay back in month to month payments. Using a credit card allows you to start to establish your credit. Some costs of credits are annual fees. Also, you have to pay interest (APR) , but if you pay the entire balance by the due date you won't have to pay interest. There are credit limits, which are max amounts that you can spend using the card. Banks will charge you penalty fees if you go over the credit limit, also known as over-the-limit.

Smart Consumers: Don't Fall Into the Credit Card Trap

When using a credit card make sure the item you're buying is something you know you'll be able to pay off. Make a budget if you have too. Also, limit your spendings. The number one thing is to just pay your bills. You want to make sure you keep your credit score as high as possible.