Being Smart With Credit
The Basics of Credit
Creditworthiness is measured in three parts.
Capital: the value of what you own
-Savings, investments, property
Capacity: your financial ability to repay loan
-High enough income
Character: your sense of financial responsibility
All of this information and more can be received from the Credit Bureau.
Credit is not free. You must pay interest (APR), which differs depending on where you are either getting a loan or which company your credit card belongs to. Your interest is also determined by your credit score.
In this newsletter, you'll learn more about credit cards.
A number that reflects your creditworthiness. The score between 300 & 850 (aka FICO score). The higher, the better.
Credit information provided by Credit Bureaus (request by lenders) when applying for credit.
Interest rate that reflects all the costs of the loan during a one year time period.
Credit Cards: What YOU Need to Know
Always make sure to do research on the card you are getting beforehand to find out about the credit card costs: if they have an annual rate, what the interest rate (APR) is, why kind of penalty fees and over-the-limit fees they have, how long the grace period is, what's the credit limit, and if any special features or rewards are offered. Most, if on all, of this information can be found in the fine print when you apply or get your credit card. Never skip the fine print.
One big benefit to having a credit card is having the power to make bigger purchases. Another big benefit is being able to use them in unexpected emergencies and not having to worry about coming up with all the money right this second.
Don’t Fall Into the Credit Card Trap
-make wise decisions about purchasing items with your credit card
-review your credit card statement thoroughly
-look out for warning signals of debt
-pay off your balance every month
-apply for a credit card without reading the terms
-use your credit card to buy things you can't afford
-get a credit card for promotional offers
-ever skip a payment