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  • Your Credit Rating Begins Now

    Your Credit Rating Begins Now

    You begin to establish credit the day you get your first credit card, apply for a student loan, or sign a contractual cell phone plan. How you handle the credit afforded to you has a direct impact on the products and rates offered to you for years to come.

    What is a credit rating?
    Your credit rating is a measure of responsibility. It demonstrates to banks and other lending institutions that you’re consistently able to pay your minimum balance on time. Your credit score represents a track record, and where you’re at now.

    The strength of your credit history is what determines if you qualify a credit card, a loan, or a mortgage, and can affect the interest rate you’re offered. If your credit rating is low, you will be deemed high risk, and the interest rate will be much higher, if you’re even offered credit.

    How do I establish credit?
    For new or young borrowers, this can be challenging, if you don’t have any credit history.

    Some lenders will allow someone with an established credit history, such as a parent or guardian, to co-sign a credit application with you. Though remember, this means that both parties are responsible for timely repayment. If your mother co-signs your credit card application, and you fail to pay, this will negatively impact both credit scores.

    Most credit cards are unsecured, meaning you haven’t put down a deposit or secured it against property. However, if you don’t have any credit history, you can look into getting a secure another option is to apply for a secured credit card, where you have collateral backing up the line of credit. Often this is a deposit, which will be returned to you when you cancel the card. Some secured cards carry higher interest rates and have fees associated with them.

    What affects your credit rating?
    Consistently paying down credit on time, at least the minimum balance or more, builds or maintains your credit rating. Each late, missed, or incomplete payment negatively affects your score. Regularly miss or make late or incomplete payments, and this could negatively affect your credit score for years.

    Your credit score is also based on the length of time you’ve maintained a credit account with a lender, and how long that account has been in good standing.

    Credit reports only track funds that you’ve borrowed. They don’t include information about whether you pay your bills or rent on time.

    How do I maintain good credit?
    Always pay your minimum monthly balance on time. Better still, pay more than your minimum balance, and pay it early, as it can take a few days for transactions to clear.

    Each time you apply for credit, it shows up on your credit history. Requesting too much credit in a short period of time can lower your score.

    Request a credit history from Equifax or TransUnion annually, and review the report. If you find incorrect information, contact Equifax or TransUnion immediately so they can begin the dispute resolution process.

  • The Strange History of Money

    The Strange History of Money

    We all use money every day. It is essential because if we want to buy some food, clothes or services we have to pay money for them. Money is recognized as banknotes and coins. However, many years ago people couldn’t just go to the shop and buy what they wanted. They had to exchange some merchandise or services in order to receive other goods or services. This process is called barter trade. It was a really difficult procedure – the barter often depends on a coincidence of wants. Giving an illustration, the seller of grain has to find a buyer who wants to buy grain and who also could offer something the seller wants to buy. The solution is to trade the wheat indirectly through a third, “intermediate” commodity. An intermediate commodity has to be imperishable and attractive in demand. For example, it could be cattle, salt, shells, wine and so on. Intermediate commodities had their disadvantages; for example cattle, fur and precious stones couldn’t be cut into smaller pieces and it was uncomfortable to keep and transport.

    Due to the disadvantages of intermediate commodities, people had to invent a simpler way to continue trading. This is where monetary or specie commodities come in. At first, specie was in the shape of metal bars, wires, rings or powder. This money was uncomfortable because it was necessary to weigh and to hallmark it. Soon, the weight and hallmark of specie were embossed on the money directly.

    The earliest known coins in the western world came from Lydia in about 650 B.C. They were made of electrum, a natural alloy of gold and silver found locally. Greek cities, The Great Persian Empire and the Roman Empire quickly adopted the new useful technique of metal currency. By the end of the 6th century, coinage was common throughout the regions. However, coins also had many disadvantages. For instance, coins quickly show wear and they usually have small value. This makes it difficult to count lavish sums of coins. Because of these reasons, people invented paper money.

    At first, paper money was used in China in about 650 A.D. In Europe, paper money was first produced in the Netherlands in the 16th century and in the USA in the 17th century. Interestingly, paper money doesn’t have any value in and of itself. It is worthless and essentially just symbolic. In other words, paper money is just a note. It has a purchasing power because the government announces it as money and citizens accept it universally. Nowadays, we often don’t see real money (banknotes and coins) because we use credit cards and debit cards exclusively. Our money is placed into electronic space and it circulates just because of our imagination.