The Basics of Credit

What is a credit?

A way to make a purchases by borrowing money from lenders. The credit bureau provides information to credit card companies with the credit ratings of individuals.

What are the forms of credit?

The forms of credit are personal loans and credit card types like low limit credit cards, prepaid credit cards and student card.

What costs are associated with credit?

APR (annual percentage rates) is extra money you pay with every purchase you make.

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

The four c’s which are capacity, character, creditworthiness, and collateral determine your credit score and how much money you can borrow; your credit report is also based on the four c's.


Terms to Know

Credit Score- is a number that represents a person's creditworthiness based on their past

credit history.

Credit Worthiness- the trustworthiness in a person's future ability to pay a debt obligation based on their credit score; a general qualification for borrowing.

Credit Report- a record of an individuals past borrowing and repaying including late payments and bankruptcy; a person should check their credit report at least once a year.

Credit Cards: What You Need to Know

What is a credit card?

A card that is used to borrow money from the bank that will be paid back with interests and annual fees to the credit card company.

Where can you use credit cards?

You are able to use credit cards at most places but beware of over-the-limit fees which occur if you exceed the credit limit.

What are the benefits and costs of using credit cards?

You increase your credit score so you can borrow money at times you want to make big purchases but don't have the full money need yet. The cost are paying interest rates and penalty fees if you don't pay the balance on time.

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


  • Protect yourself from identity thief
  • Sign card
  • Be aware of the interests rates
  • Set a budget
  • Pay more than minimum balance
  • Don't go over the limit
  • Keep track of what you charge
  • Always pay on time

Sources to Check Credit Card Scores