By Keziah Paz
The Basics of Credit.
Credit is the ability to borrow money in return for a promise of future payment. Another way to look at it is, “Buy now...Pay later.” To get credit, you must demonstrate your creditworthiness, which is your reliability to pay back a loan. Lender judge creditworthiness by 3 factors: Character, Capacity, and Capital. Character can be base on the following; Sense of financial responsibility, dependability, steady job, residence (long term), and credit history. Capacity are base on financial ability to repay loan, high enough income, and major expenses and debt. Capital are base on value of what you own, savings, investments, property, and use capital to pay loan if needed. This information comes from Loan Application or the Credit Bureau. In your loan application is under you assets (capital), income, and liabilities (debts). In the Credit Bureau, they collect info on consumers' credit and sells it.
Credit Score- is a number representing the creditworthiness of a person, the likelihood that person will pay his/ her debts.
Credit Report- a negative record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy.
Credit Cards: What You Need to Know
Establishing credit now will allow you to use credit easily in the future. If possible, start at 18 and start small. For example get store credit card, which are easier to get approved.