Kayla Cornelius Pd.2

Basics of Credit

  • What is a credit?

A credit is the ability to obtain goods before payments. Most credits are used for personal loans

  • What are the forms of credit? Low limit, Secured, Student Accounts, and Prepaid.
  • What costs are associated with credit? Annual fees, late fees, and Interest(APR) rate.
  • What determines if someone gets credit and how much they get?

Character - Bankers ask if you’re trustworthy and be reassured if you can repay the debt.
Capacity - If you can make enough money to pay off the debt.
Creditworthiness - Credit history. If you've been on time for your payments.
Collateral - If you have anything valuable that can be taken

Credit Bureau collects various information and provides the consumer their credit information.

Lender determines if the person is worthy of receiving credit based off their creditworthiness. They look at your credit score. From there, all your payments appear on your credit report


Credit Report - Check it once a year. late fees, payments, credit cards open in your name. example:

Credit Score - Numeric calculation based on information on creditworthiness; if you’ve been on time on your payments. Get better interest rate.

Interest(APR) - yearly cost on the money you borrow, the interest varies.

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Credit Cards: What You Need to Know

What is a credit card? A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit. "Buy now, pay later."

Where can you use credit cards? For necessities and big purchases.

What are the benefits and costs of using credit cards?

Benefits - Interest Rate. Credit Limit - max amount you're allowed to spend.

Costs - Annual fees, over the limit fees, and penalty fees.

These fees are costs that you have to pay every month, every time you go over the limit and every time you don't pay your fees on time.

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

Always use a secure browser. Keep information safe. Sign the credit card. Don’t share personal info. Only use credit for necessities. Pay more than minimum balance, don’t max out, always pay on time. Keep track of what you charge.