Most people finance their homes with mortages and pay for their cars with loans. Students often need loans to pay for college. And a lot more people make purchases with credit cards.
Credit is not given. You have to apply for it. Finance companies will not give you credit unless their know a lot about you. They reply on a credit report.
A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide: Equifax, Experian, Trans Union. Plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Check your credit for free at Annual Credit Report.
Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Thursday, October 27, 2011
Wednesday, October 26, 2011
Credit Cards
The word "credit" come from the Latin word "creditus" which means trust. Why should anyone trust a thin piece of plastic?
That's what credit cards are...just a thin piece of plastic with a magnetic strips. The trust lies in the information contained into the strip; it identifies who the card belongs to and the status of their credit.
When someone uses a credit card to make a purchase, the seller runs the card through a machine that reads the magnetic strip. If the person's credit account is "good", then the transaction goes through.
You must apply for a credit card through a bank, credit union or other company. You must be at least 18 years old and not have "bad" credit. It's a lot easier to have "bad" credit than you think. It can occur by making late payments on your credit card or other bills or just having too much debt.
A credit card allows you to buy things now and pay for them later. It's kind of like taking out a short term loan. They are very handy in emergencies, when you need money fast or when you just don't have cash on hand.
A credit card has a spending limit. You cannot spend more on the credit card than the limit. For example, if your limit is $5,000, then you cannot spend more than $5,000 on that credit card within the cycle --- usually 20 to 30 days.
Financial instutions and companies make more on credit cards by charging finance fees. They might charge an annual fee for the card, late fees and some charge is the card is not payed off each month.
Credit cards work best for people who stay within their budgets and pay off their credit card account each monthy so that they avoid finance charges.
That's what credit cards are...just a thin piece of plastic with a magnetic strips. The trust lies in the information contained into the strip; it identifies who the card belongs to and the status of their credit.
When someone uses a credit card to make a purchase, the seller runs the card through a machine that reads the magnetic strip. If the person's credit account is "good", then the transaction goes through.
You must apply for a credit card through a bank, credit union or other company. You must be at least 18 years old and not have "bad" credit. It's a lot easier to have "bad" credit than you think. It can occur by making late payments on your credit card or other bills or just having too much debt.
A credit card allows you to buy things now and pay for them later. It's kind of like taking out a short term loan. They are very handy in emergencies, when you need money fast or when you just don't have cash on hand.
A credit card has a spending limit. You cannot spend more on the credit card than the limit. For example, if your limit is $5,000, then you cannot spend more than $5,000 on that credit card within the cycle --- usually 20 to 30 days.
Financial instutions and companies make more on credit cards by charging finance fees. They might charge an annual fee for the card, late fees and some charge is the card is not payed off each month.
Credit cards work best for people who stay within their budgets and pay off their credit card account each monthy so that they avoid finance charges.
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