Credit Credit: borrowing money to pay for something now while promising to repay it later. Lender: the person loaning the money Borrower: receives the money Interest: the cost for the use of that money Annual percentage rate (APR): the yearly cost of the credit given as a percentage on the amount barrowed. Credit rating (creditworthiness): an evaluation of the likelihood of a barrower not being able to repay or default (takes into account credit experiences, financial situation, job, and more). Collateral: property that you pledge as security and a lender will take if you fail to pay.

sources Banks, credit unions, financial institutions, and even some retail stores offer credit to consumers. Mortgages and car loans are also forms of credit that usually require a down payment or part of the price. They have different rates of interest on them. Credit cards: a card used to purchase items with barrowed money that has a limit for the month. Institutions will usually check your credit rating and set the amount based on what they think you can afford. A fee is charged if your monthly payment is late. High interest rates on long unpaid balances can bring ruin. If you pay off the bill before than $0 is charged in interest, if you do not then you can make payments (with a minimum) and take you time paying it off.

Debt You get a free credit report from national credit companies once a year. annualcreditreport.com Debt consolidation: taking out a loan to pay off all your other loans with a lower interest rate. Debt management: an agreement between a lender and a barrower to regain control of a persons debt but paying a smaller amount over a longer period of time.