If you’re thinking about getting a credit card, but wary about the fineprint that may come with the luxury of plastic transaction, don’t worry. We got you. Let’s start with the basics: Wtf is a credit score?

Understanding credit score can help you in many ways: Improve your spending habits, build a relationship between you and your bank, and keep you financially savvy for as long as you’re diligent with your account.

Banks are incentivized to front you money because when they finance you, they expect to make money from the interest on your return payments. The interest rate is based off of a credit score. The ability and likelihood of paying back credit card companies determines your credit score, which scales between 300 and 850, and just like any game, the higher the score, the better you’re doing.

The only people who look at these scores, other than you, are future lenders like banks, mortgage loaners, car dealership loaners, etc. Your score is essentially your credibility–or the level of how likely you will pay off any outstanding debts.

It’s important to think of your credit score early, because it has a significant impact on your life: Your future of requesting and receiving loans depends on your credit score.

When a cardholder has a high credit score–ideally between 740 and 850, his or her interest rates (set by the loaner) will be low, making the ownership of the card extremely worthwhile as the cardholder chooses to take out more loans.

Conversely, a low credit score suggests a low chance that the cardholder will pay back their debts on time, which raises their interest rates on credit payment.

Once you get in the groove of monitoring, maintaining and improving your credit score, you’ll become more aware of your financial limits and in turn, more confident in your life.

Factors that affect credit score can be synthesized into a handful of things: payment history (not a huge deal for young folk with a short or nonexistent history), types of credit (student and retail loans are the most relevant for those going to college), and amount owed when the time comes to pay off your debts.

A lot of banks that want you to use their credit cards will offer a variety of enticing bonuses, whether they be travel rewards points or cash back programs. Credit card companies and banks are not in the business of losing money, so more often than not, the interest they’d gain exceeds the value of the rewards. That initial bonus feels great, but if it requires you to spend beyond your means, it’ll complicate your ability to pay off your bills and negatively affect your credit score, which can be hard to recover from.

Honestly, the term “shop-a-holic” is all too real, but it pays to be responsible with a credit card, especially with those that offer rewards and no annual fees.

The convenience of a credit card is too attractive to ignore, but the ease of purchasing almost anything with the swipe of a card or the insertion of a few numbers leaves way for irresponsible behavior leading to unfavorable or stressful life situations.

The convenience of a credit card is too attractive to ignore, but the ease of purchasing almost anything with the plastic swipe or the insertion of four digits leaves way for irresponsible behavior leading to unfavorable or stressful life situations.

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1 Comment

Store Credit Cards: Why You Need to Read the Fine Print | Avant-Youth · December 1, 2019 at 10:28 am

[…] utilization rates imply you don’t have the funds to pay the debts you own. That can tank your credit score, which heavily impacts your ability to buy big ticket items (cars, apartments, […]

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