CREDIT WISE: NEEDS VS. WANTS
How to get it, use it or sink it in the world of credit
The What, Why and How's of Credit
Credit used by most people are credit cards. These are cards in which you apply for and are provided by banks or companies called lender and who charge interest on your balances. Credit cards allow you to use the card to purchase cloths, food or personal items you need or want. To apply for the credit card you will complete the application process and your credit report will be viewed by the lender, bank or credit card company. These compaines and or banks will use your credit score to determine your crediworthiness. The information on your creditworhniess and credit scores are reported to credit bureas. These reports have your personal information, social security number, credit you have and payment history in file.
Loans are another form of credit and most hold loans called mortgages, car loans, student loans or personal loans. The mortgages are loans on a home. Student loans is money you owe to a lender for college, car loans or auto loans are owed to the bank for the car you purchased, and personal loans can be for items you purchased and took the loan out for. One thing to keep in mind concerning loans and credit cards is the inerest rate you pay on each of these types of credit. The higher the interest or APR (annual percentage rate), the rate of interst you pay on your balance over a year, the more you will pay back to the lenders or credit card companies.
Credit comes forms such as loans or credit cards. Most commonly used by students are credit cards. These are cards issued by banks or credit companies in which you can make purchases and pay back the balances in full, or monthly payments determined by the compaines, the interest rate they charge and your balance. The payment is called monthly payment amount due.
Credit Bureau is where your personal credit information is kept on file. The credit bureas keep information on your credit applied for, and your payment history to the credit companies or loan companies. If you miss payments or make timely payments will determine your credit scores. Credit scores are privided by the credit burea.
Your credit worthiness is what credit companies or banks look at when determining if they will give you the credit. Your credit worthiness is imporant when you what to apply for credit such as a mortgage, car loan or even student loans. The better your credit score the better your credit worthiness is and companies will even offer you better interest rates.
CREDIT CARDS: WHAT YOU NEED TO KNOW
Credit card companies charge over the limit fees if you go over the amount of credit you are given. When you apply for credit you will be given a credit limit. This is the amount you are allowed to charge up to or use on a loan. The insterest is added to your balance and the extra fees you are charged when you go over the limit or miss a payment.
Using credit should be only when necessary and based on your income too. If you budget well the advantages are good. When you pay on time and use it properly you can get good rates and higher credit scores. Credit should be used for emergencies such as repairs to your car, and only if you know you can pay back the balance. Sometimes using your credit cards are good for traveling instead of cash, but again use caution and only if you know you can pay back the balance or meet the monthly payment. The benefits of good credit is great interest rates on future credit cards, loans such as a car and mortgage. Even student loan rates can be better with good credit, and you dont need a co-signer to help you to get a loan.
Smart Consumers Don't Fall Into Credit Traps
Credit cards are great for having to build your credit history, and good for emergency spending when cash is not available. But, using credit without knowing your budget or having a way to pay back the balance becomes a real problem. When you get a credit card offer, dont jump right in and apply. If you apply for a card make sure you can meet the monthly payment and only spend what is necessary within your budget plan.