What is Credit?
Credit is the supplying of money, goods, or services at present in exchange for the promise of future payment. There are 4 main ways of paying for things. They are cash, check, credit card, and debit card. Credit cards can drastically affect your credit score.
How and when do you receive credit?
The best way for a beginner to get credit is to apply for a credit card targeted for people who are new to credit. If you already have a checking or savings account, check to see if your bank has a credit product meant for someone with limited credit history. You should be around 18 before you get your first credit card or loan.
This website goes more in depth:
https://www.thebalance.com/how-to-get-credit-for-the-first-time-960092
This website goes more in depth:
https://www.thebalance.com/how-to-get-credit-for-the-first-time-960092
What is a credit score?
Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It can mean the difference between being denied or approved for credit, and a low or high interest rate. A good score can help you qualify for an apartment rental and even help you get utilities connected without a deposit. Banks look at your credit score if you ask for loans, along with what is called "The 3 C's of credit". There are 3 Credit Agencies that you can get your credit score from.
3 Credit Angencies
Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
800.997.2493
Equifax.com
Experian
P.O. Box 949
Allen, TX 75013-0949
888.397.7654
Experian.com
Trans Union
P.O. Box 390
Springfield, PA 19064-0290
800.888.4213
Transunion.com
P.O. Box 740241
Atlanta, GA 30374-0241
800.997.2493
Equifax.com
Experian
P.O. Box 949
Allen, TX 75013-0949
888.397.7654
Experian.com
Trans Union
P.O. Box 390
Springfield, PA 19064-0290
800.888.4213
Transunion.com
3 C's of Credit
The 3 C's of credit are Character, Capacity, and Capital.
Character - From your credit history, the lender attempts to determine if you possess the honesty and reliability to repay the debt.In pursuit of that assessment, they might ask the following questions:
- Have you used credit before?
- Do you pay your bills on time?
- Do you have a good credit report?
- Can you provide character references?
- How long have you lived at your present address?
- How long have you been at your present job?
Capital - The lender will want to know if you have any valuable assets such as real estate, personal property like an automobile, or savings and investments that could be used to repay credit debts if income is unavailable.They might ask these questions with regard to capital:
- What property do you own that can secure the loan?
- Do you have a savings account?
- Do you have investments to use as collateral?
Capacity - This refers to your ability to repay the debt. The lender will look to see if you have been working regularly in an occupation that is likely to provide enough income to support your credit use.The following questions will help the lender determine this:
- Do you have a steady job? If so, what is your salary?
- How many other loan payments do you have?
- What are your current living expenses?
- What are your current debts?
- How many dependents do you have?
Someone who is giving you a loan is allowed to ask question about personal information. This includes :
- Name
- Telephone number
- Social Security number
- Employer
- Length of employment
- Marital status
- References
- Current income
- Prior debt
- Current debt
- Bank account balances
Also, your credit report includes this information :
- Name
- Address
- Telephone number
- Social Security number
- Date of birth
- Place of employment
- Tax liens, judgments, and bankruptcies
- Current loan balances, original amount borrowed, amount of payment, status, and number of late payments
- All credit inquiries for the past 24 months
Loan Sharks
A loan shark is a person or body who offers loans at extremely high interest rates. The term usually refers to illegal activity, but may also refer to predatory lending with extremely high interest rates such as payday or title loans. Loan sharks sometimes enforce repayment by blackmail or threats of violence. Stay away from them at all costs.
Debt and Bankruptcy
Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
http://www.investopedia.com/terms/d/debt.asp
Bankruptcy is a process that allows consumers and businesses to repay some or all of their debts under the protection of the federal bankruptcy court. For the most part, bankruptcies can be divided into two types -- liquidation and reorganization.
http://www.nolo.com/legal-encyclopedia/chapter-7-13-bankruptcy-basics-29829.html
http://www.investopedia.com/terms/d/debt.asp
Bankruptcy is a process that allows consumers and businesses to repay some or all of their debts under the protection of the federal bankruptcy court. For the most part, bankruptcies can be divided into two types -- liquidation and reorganization.
http://www.nolo.com/legal-encyclopedia/chapter-7-13-bankruptcy-basics-29829.html