Category: TRIO Financial Literacy

Hello you all! This week, we will look into the importance of credit and why it has so many benefits.

One of those benefits is the daunting B-word; get your mind out of the gutter, not that word! I am referring to the word, borrow. If you are like me, you too don’t like to borrow from anyone because you like keeping your money. Borrow is using something belonging to someone else to return it. “Loan” can be a noun, such as a sum of money that you must pay back with interest, or a verb, the act of lending something to someone. Please don’t think I am a weird person; we all know that you are borrowing for a large purchase like a home or car.

As a college student, it is likely you borrowed money and currently are dealing with student loans. If you have a healthy credit score, then borrowing isn’t a bad thing. When borrowing, the annual percentage rate (APR) is critical when deciding which loan to accept. The lower the APR you receive means that you will pay less interest over time. Your APR ties right into your credit score. The higher your credit score, the less interest you will be charged. In this sense, if you’ve had financial issues in the past, you could be in a place where your finances are paying off interest. Having excellent credit gives you the financial freedom to have great financing options when borrowing.

There is the other side of borrowing, repayment. Repayment seems to be the part I struggle with most. I simply don’t like giving away money. There are several options available to students as it relates to student loans, but you must be willing to call and ask about your options. Most lenders are willing to work with you if you are responsible managing your repayment. Consider that for smaller items, and you could borrow from yourself because you have been budgeting. Remember please take what you need from this blog and let’s build!

Hello and welcome back to the TRIO Financial Literacy Blog. In the previous blog, we talked about what credit is. In this blog, we will cover different types of credit.

During my research, I came across two primary forms of credit — revolving credit and installment credit. Revolving credit usually is your credit card. It is credit that can be borrowed repeatedly but has a set limit — your credit limit — that you can borrow. Most likely you are in control of how much you borrow, and interest is charged if the balance is not paid by the due date. As you pay on time, the account stays open until you choose to close it. Another example of revolving credit is a home equity line of credit.

The second form of credit is installment credit. Installment credit is a loan that you borrow one amount and repay it with interest in accrues in installments each month. At the time it is paid back in full, then the account is closed. Typically this type includes mortgages, personal loans, auto loans, and student loans.

In recent years there has been another form of credit that has emerged, it called “open credit.” Open credit does not have a set amount to repay as it varies from month to month. Open credit includes utility bills, cable, and even cellular services.

All in all, credit gives you the option of purchasing items now instead of later. I want to remind you of what we learned in earlier blogs. The money you spend should make you more money. Credit is part of your financial power. It helps you get the things you need now, like a loan for a car or a credit card, based on your promise to pay later. Working to improve your credit helps ensure you’ll qualify for loans when you need them. The choice is yours on how you choose to spend your income but let’s remember to be smart about utilizing our funds. As always, let’s build!

Reference

Time. (2021, July 21). Understanding different types of credit | nextadvisor with Time. Time.

October has been coined as National Credit Awareness Month in the United States of America. In other words, this is a good time to get a better understanding of what is credit.

So, what is this “imaginary money” that keeps our country functioning and causes massive debt? Credit is the ability to borrow money or access goods or services with the understanding that you’ll pay later. In the past reputation was a major factor on deciding creditworthiness. Now, credit is a 3-digit number ranking from 300-850. It is a representation of a person’s creditworthiness. This number, used by creditors to understand your record of borrowing and repaying funds, is known as credit history.

Credit history is compiled from reports that are housed by three independent bureaus- Experian, TransUnion, and Equifax. All card issuers, banks, and credit unions all voluntarily send your borrowing and repayment information to the bureaus.

While credit comes in many forms, the most common are credit cards, home mortgages, car loans and student loans. You must apply for credit, and the amount you’re authorized to use is determined by lending institutions like banks or mortgage companies. It is based on your personal financial history.

Having good credit makes it easier to do many things, including rent an apartment or buy a home or car; sign up for a cell phone plan, or get a student loan. Good credit is necessary if you plan to borrow money for major purchases, such as a car or a home. With good credit, you can even save money in the form of lower interest rates or waived fees and down payments when setting up utilities. As consumers, we use credit to buy almost everything, including food, clothing, housing, and transportation. Unfortunately, many people struggle to control their use of credit and get overwhelmed by piles of bills. 

In the next blog we will discuss different types of credit and how to decrease debt. If you have specific questions or would like to better understand what credit is send me an email to dlsingleton@sc4.edu. Always remember, this is a person-centered approach, so take what you need and apply it to your situation. As always Let’s Build!

Photo Credit by Nick Youngson CC BY-SA 3.0 Pix4free.org

Hello and welcome back to school, and for our newcomers, welcome and all the returners welcome back! This week will pick up right where we left off, let’s talk financial literacy.

Here is a quick recap: The blog’s purpose is to provide you with the necessary skills for a sense of financial awareness. What is financial literacy? Financial literacy is “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing” (The President’s Advisory Council on Financial Literacy, 2008).

While researching financial literacy, five key components consistently appear. The five components are earning, spend, save, and invest, borrow, and protecting. During the continuation of this blog, we will better investigate each of these components of financial literacy. We ended the year on saving, and I hope that you had the opportunity to save, save, and save more money than you anticipated over the summer. If not, that is ok. I have good news for you; it is always ok to begin again. 

Last year we learned that earning is “when you trade your time and energy for money” (Donati, 2020). In laymen’s terms, you earn by the hour working during the time allotted. Spending money is/should be the perfect way to increase your overall value. Spending money should be a well-thought-out process, and the best way to remedy financial literacy is by budgeting. You must be willing to save according to what seems to stretch you beyond your limits. Saving can, at times, feel like a sacrifice because it is. Living in a society that thrives on instant gratification can rob you of the joy that comes after persevering. In the coming weeks, well will cover investing, borrowing, and protecting your money.

I want to caution you that as we explore, together, that you take what is necessary for your financial health. In other words, this is not a one-model-fits-all blog. This blog is a person-centered-approach blog where you collect information that is beneficial for your financial wellbeing. Let’s build!