Credit Newsletter

By: Marieanne lopez

The Basics of Credit

● What is credit?

Credit is borrowing money in return to promise for a future payment. Credit isn't free and it requires an interest (APR).

● What are the forms of credit?

They are a couple forms of credit. You can get credit by getting a credit card, or getting a personal loans on a car, house, or even school.

What costs are associated with credit?

There can be annual fees that are required, interests rates, penalty fees, late fees if payment is late, and also over-the-limit fee for going over your credit limit.

● What determines if someone gets credit and how much they get?

To receive credit you must prove that you are creditworthiness. People prove it by showing your reliability to pay back a loan by using the 3 C’s: Capital, Capacity, and Character. Capital is the value of what you own, and includes your savings, property, and investments. Capacity is the financial ability to repay your loan, and checking if you have a high enough income. They also check you if you have any debts or major expenses. Character is basically the sense of having financial responsibility, dependability, and having a stable job. They also check your credit history, which includes your credit score. You can get your credit score from a credit report, and its mostly requested by lenders. Most of this information comes from a Credit Burer and Loan Applications.

Vocabulary Watch

1. Capacity: The max amount .

2. Credit History: A record of a consumer's ability to repay debts and demonstrated responsibility in repaying debts.

3. Credit Limit: Maximum amount a credit card company will allow someone to borrow on a single card.

Credit Cards: What You Need to Know.

● What is a credit card?

A card issued by a bank or business for the purchase of goods or services on credit. They all have Interest Rates (APR), which is a percentage of money you pay the bank for letting you borrow it in the first place. Credit cards all have penalty fees, and a credit limit, which is the maximum amount you can spend on a credit card. Some people go over the max amount, and that is a penalty, which requires an over-the-limit-fee.

● Where can you use credit cards?

You can use credit cards mostly everywhere. You can use them at restaurants, shopping centers, gas stations, etc.

● What are the benefits and costs of using credit cards?

It allows more consumers to buy goods, and it allows you to build up your credit, if you maintain paying on time.

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

  • Look for low Interest Rates.
  • Always pay on time.
  • Only use card during emergencies.
  • Don't take out too many cards.
  • Don't go over-the-limit.
  • Pay credit card balance in full payment.