Credit: Benefits and Risks Essay

Credit: Benefits and Risks Essay

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Credit: A line of good faith that allows you to buy objects in advance of payment.

Credit Card: A card authorizing purchases on credit

Credit Card Fee: A fee given based on the percentage of the credit given

Debit Card: A card similar to a credit card, used to withdraw money from a savings or checking account. Money is instantly transferred out of the persons account

Interest: The cost of using another person’s money

Interest Rate: The percentage that determines the amount of interest a person pays based upon the principle

Credit Solicitation: A request for credit

Credit History: Record of borrowing and paying habits, used to determine the credibility of a person

Credit Checks: A review of past credit history, detailing previous dealings with credit

Credit Inquiry: A record on the bottom of a credit check given any time a creditor checks the person’s credit

Credit Rating: An estimate of the amount of collateral a bank could safely give a solicitor

Credit Line: The maximum amount of credit allowed to a solicitor

APR: Annual Percentage Rate, the fee given upon the extension of credit, based off of the principle

Minimum Payment: The minimum amount of money a debtor is required to pay

Account Balance: The amount of credit extended at the point of time including interest

Balance Payer: The person responsible for the repayment of the debt

Identity Theft: The illegal use of a person’s SSN in order to obtain credit

Credit Consolidation: A method of reducing the amount of debt owed via a single loan replacing two or more debts

Teaser Rates: An introductory APR offered during a certain period to new debtors

Balance Transfers: Debt transferred to another method of debt, i.e. one c...

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...s of not paying include the temptation to buy that which one cannot possibly afford, or to live beyond one’s means. Credit in the form of a card can also result in possible loss of identity and suspension of accounts during any investigation. In today’s society a poor score closes many doors from renting an apartment to receiving a job.

Overall a person should not worry too much about their credit, they should only be mindful of the path with which they travel. A teen should be excited to begin exercising his/her financial freedom, as it will provide many paths to travel. A teen with a “good” credit score will be more likely to receive a job than a teen with no or a bad credit score. Parents should encourage their children to maintain good money habits, and help them with their financial endeavors, covering their trail, while expounding responsibility into them.

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