Credit Questions??

What are the implications of having either a positive or negative credit history?

What would constitute a responsible use of credit?

What are three (or more) inappropriate uses of credit?

When selecting a credit card, what factors should one consider?

What are the important factors to consider when selecting a credit card?

Why is it important to shop for credit?

Do you think that high school students should have credit cards? Why or why not?

Hmm...looks like a homework assignment lol.

1.) A pos/neg. credit history will indicates to other potential lenders how risky an investment lending you money is likley to be. If they veiw you as risky they will charge you more (a higher interest rate) to lend you money. When you start looking at big purchases like cars, houses etc. a few extra percent charged in interest make a huge difference.

Really bad credit can cause you to be declined for loans, turned away from renting an apartment, even turned down for a job (some employers check credit scores.)

2.) A responsible use of credit (just my opinion) is for something that will go up in value (such as a property/house etc.), something that will bring in revenue (a business, investment property, student loans etc.)or certain neccessities that allow you to make money (like if you need a car to get to work).

Also, if you are using credit but not paying interest on it...some people purchase using credit but pay off the balance before interest is charged.

3.) Irresponsible uses of credit...holy crap there are a million. I would say when you are using credit to finance a lifestyle that you cannot afford today you are being irresponsible. If you don;t have the money to buy new shoes, go out to dinner, x-box games etc. then you shouldn't use credit to buy them. That is living a life you can't afford, and it will catch up to you.

Also, I see a lot of people using credit on justifiable stuff...but only because they used their cash on things that were not responsible. If you are paying for your food, gasoline, or text books with credit because you spent your paycheck on video games.

4.) When looking at a credit card, I would make sure I know if there is an annual fee (if so, why?) what the interest rate is (and how it compares to the bunches of others you can get), any incentive programs (miles etc.)

5.) Interest rates are low and credit companies are competing with each other to get customers...might as well make their competition work for you.

6.) High School students...hmm, well I think that high schools NEED to start teaching basic personal finance in school. It is unreal how many people I know that have had to learn about money and credit on their own and have caused huge damage to their financial lives by the time they are in their early 20's. People under 25 are declaring bankruptcy at shocking rates and having to deal with the consequences for years to come.

I think high school kids should be taught about credit by their parents as well...to me it is a lot like teaching a kid about hand guns if you have one in the house...teach the kid all of the ways that they can be hurt by using them irresponsibly, and maybe under strict supervision how to use them responsibly.

Thanks Alot Man.