Credit Newsletter

By: Nick Gulo Period 7/8

The Basics of Credit

What is Credit?

is the ability to borrow money and in the future pay it off. The higher your credit score is the better. The credit bureau has a record of every adult and can see if you bounced a check, missed a payment, been sued, or you filed bankruptcy.

What are the forms of credit?

Credit cards and personal loans are forms of credit and if you continually make payments this will help increase your credit score.

What costs are associated with credit?

Having credit is not free and if you have credit you have to pay interest(APR).

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

To get credit you must demonstrate your creditworthiness and your reliability to pay back a loan. This is determined by lenders and they judge this using 3 factors: character, capacity, and capital. Your credit report is provided by the credit bureaus and shows your credit history and credit score.

Vocabulary Watch

Interest- When you borrow money from the bank you have to pay an annual interest rate. Not only do you have to pay back the money you borrowed, you also have to pay the interest for letting the bank borrow you money.

Creditworthiness- This is how reliable and responsible you are to pay back loans. There are three parts of creditworthiness: capital, capacity, and character. Capital shows the value of what you own. Capacity is your financial ability to pay back a loan. Character is how responsible and dependable you are.

Credit Score- The scores range from 300 to 850. The higher the credit score is the better. Some of the things that are good for your credit score are making payments on time, having low debt, long history, and limited number of credit cards. The higher your credit score is the lower the interest rate is.

Credit Cards: What You Need To Know

What is a credit card?

A credit card, such as VISA, MasterCard, or Discover can give you cash back, points, and can go toward airline miles. In a regular charge account you must pay the full balance and in revolving charge accounts you don't have to pay the full balance at once and can be carried over month to month.

Where can you use credit cards?

You can use credit cards anywhere.

What are the benefits and costs of using credit cards?

The benefits of using credit cards is that you can get cash back, you can earn rewards points, and you can earn airline miles. The costs of using credit cards is that you have to pay annual fees, pay interest, there are credit limits and if you go over the limit you are charged a fee, and there are penalty fees if you make a late payment.

Smart Consumers: Don't Fall into the Credit Card Trap

When using credit cards it is important to keep track of your balance and how much you owe. If you don't keep track you can easily fall into a lot of debt and this can really harm or destroy your credit score. Also try to have as few credit cards as possible because you can easily lose track of payments if you have a lot of credit cards and can put you in a lot of debt.