Being Smart with Credit

The basics of Credit

Your credit is the ability to borrow money in return for a promise of future payment. To get credit you must demonstrate creditworthiness. This means your reliability to pay back a personal loan or any loans because lenders judge this by using character, capacity, and capital.

Although credit is not free you do get some benefits with having credit. Some benefits include building credit report (history) , getting rewards, and using credit to stay on a day to day spending. There are some costs as well as having credit which include paying annual fees, paying interest , and interest in overspending money that you don't have.

There are two forms of credit which are loans and credit cards. Good credit is credit like loans and on things that are important or in need of. For example using credit for loans is a good idea because its for something good. Bad credit is when you spend money you don't have on things you don't need but want. For example, shopping for clothes or shoes when you already have enough but you just want to have it.

To determine if someone gets credit is by their credit score. If someones credit score is higher, then that would determine how much money they get as well. Credit bureau collects information on consumers credit and sells it.

The credit score(rating) is 300-850 and the higher the rating the better it is. The effects on this score is based on if the payments are paid on time, low debt, long history, and limited amount of credit cards.


Credit Score: The score is between 300 and 850 (it's also known as FICO score). The higher the score the better it is. The effects on score is on time payments, low debt, long history, and limited number of credit cards.
Interest (APR): Charged to the borrower, but if you pay your entire balance by due date there will be no interest. The interest rate usually ranges from 0-29%.
Creditworthiness: To get credit you must demonstrate your creditworthiness which is your reliability to pay back a loan.

Credit: What you need to know

A credit card is a small plastic card issued by a bank that allows the person to purchase goods on credit. The common cards are Visa, MasterCard, Discover, and Amex. You can use credit cards in some stores depending if they accept it. The benefits of using credit cards is that you can get rewards for example cash back on everyday purchases, and airline miles that can be redeemed for trips. Another benefit is for emergency spending. Credit cards also allow consumers to be more flexible with their cash. The costs of having a credit card is the fees that come with it. For example, annual fees, credit limit, interest rate (APR), Penalty fees, and Over-the-limit fee. The annual fee is required every year and you have a certain amount of money you must pay. It ranges from $15-100.

Credit Limit is the maximum amount you can spend using the card. When using credit cards there is an interest rate (APR) that you have to pay which is between 0-29%.If you pay your entire balance by due date there will be no interest. The lower the interest rate the better is is for the consumer. Additional fee due to late payment, over credit limit, and returned payments are penalty fees. This also could result in increase of your interest rate(APR). Over-the-limit fee is when someone goes over their credit limit.

Smart Consumers: Don't fall into Credit Card Trap


  1. Don't overspend, and Don't miss payments.
  2. Pay credit card balance full. Avoid minimum payment trap.
  3. Choose card wisely
  4. Avoid to many cards