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Financial Literacy: Borrowing

A guide designed with UCNJ students in mind; personal finance, investing, paying for college, and making wise financial decisions.


What is Credit?

Credit is offered by a lender. Borrowing money allows you to purchase something now and pay for it over time. Your credit can affect your ability to rent an apartment, finance a car, take out a loan, etc. Your credit is reflected in your credit history, credit reports, and in your credit score. There are many different types of credit, these differ depending on how you are going to pay back the borrowed money. 

Credit Score

Credit score is what classifies someone as a low or high risk to lenders. This three digit number, ranging from 300 to 850 is calculated using the information on your credit report. The higher your score, the better your credit standing. Lenders for a car, home, etc. may use this score to determine if you qualify for a loan, your interest rate, and a limit on your credit. 

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Interest is the cost you pay to borrow money. Interest rates are typically reflected using a percentage of the money borrowed over time. It is important to take into consideration interest rates when borrowing money. 

Credit Reports

What is a Credit Report?

A credit report is a summary of your personal credit history. The information found in your credit report may include identifying personal information (name, address, social security number) and information about your credit history (how you pay bills, debts, loans, if you filed for bankruptcy). There are three nationwide credit bureaus, Equifax, Experian, and TransUnion. 

What is a Credit Report Used For?

A credit report is often used to determine if you can get a job, rent or buy a place to live, and buy insurance. Lenders, landlords, and insurance companies can use your credit history and credit report to decide to allow you to borrow money, how much they will allow you to borrow, and/or determine interest rates and fees. 

Free Annual Credit Reports

The three credit bureaus (Equifax, Experian, and TransUnion) are required to give you a free copy of your credit report every year. You can apply for your free credit report at or on the individual credit bureau's site or by giving them a call.

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