Credit Education
Get knowledge now before it's to late!
The basics
How do you obtain this credit score? Well its fairly simple, there are people out their called credit bureaus who gather your credit information such as spending habits, debt, loans etc. for potential lenders and come up with what is known as your credit report. This is basically an informational way to tell of your creditworthiness, or in simpler terms, the probability of how responsible you are to pay back your credit.
Credit does have its benefits though, besides being able to help you purchase items a lot of credit cards come with benefits and rewards for using their company. Also, with the amount of competition going on between all the different companies there is always many options to pick the card with the right benefits for your spending habits!
Vocabulary watch
Creditworthiness
An assessment of the likelihood that a borrower will pay back on their debt obligations. It is based upon factors, such as their history of repayment and credit score.
Interest (APR)
An annual percentage rate (APR) is the annual rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.
Credit
the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
Need to know questions!
Frequently asked questions
A. A credit card is a small plastic card issued by a bank or business used to purchase goods.
Q. Where can you use credit cards?
A.You can use your credit card generally just about everywhere and it makes shopping a lot more convenient without having to carry around cash. The better your credit score the higher your credit limit is on how much money you may spend.
Q. What are the benefits and costs of using credit cards?
A. Benefits would be you have more money to spend to make bigger purchases if need be, you also get rewards from using credit. The rewards are based off of what benefits you from your specific card.
Some costs of using credits cards are if you are not responsible and go over your limit available to spend you get charged an over-the-limit fee also irresponsibility leads to penalty fees which occur when you don't follow the agreements of having the card. Depending on the type of credit card you chose you may have annual fees having to pay for the services of the card every so often. Also an interest rate is given on all purchases to better secure that you will pay back.
Being a Smart Consumer!
Website: http://www.wisegeek.org/how-is-a-credit-score-determined.htm