By: Jose Bolivar
What is credit?
Credit is the ability to obtain goods or services before payment.In other words credit allows you to make a purchase and pay later. Credit comes in the form of credit cards or personal loans. In order to use credit you must demonstrate your creditworthiness with your reliability to pay back a loan. In demonstrating your creditworthiness the credit bureau will collect information on you and give you a credit score.Your credit score determines the amount of money you are trusted to borrow and will pay back. Every time you use credit when making a purchase it costs you more because of interest.Interest is like a charge the lender puts on a loan that continues to increase the longer you take to pay the loan back.
What is a credit card?
A credit card is a plastic card issued by a bank for the purchase of goods or services on credit.Credit cards can be used almost anywhere when making a purchase.The benefit of using a credit card is not having to carry money.With a credit card you can carry as much as your bank will loan you or your credit limit.The bad things about using credit cards are the annual fees, interest rates, penalty fees, and over-the-limit fees which are all costs of using a credit card.
Stay safe while using credit cards
- only use credit cards when you really need to
- pay off the loan as quick as possible
- keep track of purchases made with a credit card