outline different sources of credit? (No less than 250 words)
Start off with a
definition of credit, and then think about different sources of credit, eg.
Loans, credit cards…etc. Briefly describe and explain each one you find.
One of the
sources would be if you are doing finance, a short-term will mean you must pay
that money back within next years. A long-term will be paying the money back in
many years. Overdraft is something when you go over the limit from the bank and
you will have to pay them back. Owners will be under a long-term source. This
is when an owner is trying to make a new brand/clothing brand and they invest
money. A loan is another example of borrowing money from a family member or the
bank. Internal sources are something for example profits. They will put back to
the finance expansion. However, the business can sell accents and don’t need it
to be free up cash. The external source is a finance that is outside the
business from example banks from other branches.
to use credit responsibly for expenditure and investing. (No less than 250
Think about the
information you give when you apply for credit. Also think about interest
rates, repayments, credit statements, keeping the loan company informed etc.
Why is it important to be mindful of these?
the potential problems of using credit (No less than 250 Words)
can’t pay the balance, however, this could mean they will have to pay with a
credit card and avoid that will have to pay the balance when the bill comes
through. If you keep missing your credit card payments it will impact your
credit score. If you are unable to make the payment the best thing is to
contact them soon as possible. If you don’t know your credit score you should
always check how much you have. If you purchase something with your credit card
it won’t go on the minus, it will just straight away decline. However, if you
go over the limit it will impact on your credit score. If you are applying for
a mortgage you must present yourself and the best of this ability. This will
mean showing that you don’t get overdrawn for example and paying this on time.
This also means showing a good credit score but if you have a low credit score
it will come to a conclusion with a loan or on the other hand you could always
wait to try to boost up your credit score.
Think about the potential
problems of using credit and the consequences of those problems, such as legal
action or repossession of goods. These are only a couple of examples, there are
that could be caused by credits is if you borrow too much money you won’t be
able to pay it back and paying additional interest. However, this will be
difficult by getting loans/credit scores in the future. For example, the most
credit card doesn’t require to pay off the balance every month. For example, if
you buy something for £200 you have will to pay at least £600 to £1000. Credit
card fraud can be something common. If you realize you lost your credit card,
you need to cancel it straight away. You will also need to make sure that you
don’t give information to another person or give information to a reliable
company. Missing credit card payments will be recorded and put on your credit
file. However, depending on your credit you could be charged fees while you are
paying back the payment. However, more problems would be, if you borrow money
from a bank and you want to borrow 20k. You will be intituled to pay back the
money. If you don’t pay back the money your account will be blocked. This will
mean you won’t be able to open another account because you’re blocked from
every account. In the long term, it will affect your credit score and you won’t
be able to get a mortgage. You could be blocked from any bank for years, to
solve the situation is to try to get your credit score up.