Category : Advice

4 types of credit and deep dive into credit types

Four Common Forms of Credit.

What is credit?

Credit is defined in several ways. One is the amount of money you are approved to borrow from a lending institution. With this approval comes an agreement to repay it with interest, additional fees that can be applied, and a certain time to pay back the complete amount with interest. Credit is classified as your borrowing reputation. It paints a picture to the lenders of your payment history and provides the lender with information regarding the likelihood of you repaying the borrowed amount with interest. They put on a risk ladder, the lower you are on it the more money they are likely to lend to you as you are considered a good borrower in their eyes, the higher you are on the ladder the harder it will be for you to get a loan and even if you do, the interest rate will be high because of the extra risk they are taking by lending you money.


Using Credit To Your Advantage


Credit is essentially a financial tool, if you learn about credit and how to increase your score you will be ahead of the curve. Credit is woven into the fabric of the American way of life from a simple credit card to an auto loan to a home mortgage loan. Cashless transactions are soon becoming the way of the future, and credit cards are among the most prevalent. Understanding credit is important to use credit to your advantage and prevent the common financial pitfall known as debt.


Four Major Forms of Credit

  Revolving Credit


You can borrow money up to a particular amount with this type of credit. A credit limit, or the maximum amount you can borrow, is set by the lending organization. The borrower in a revolving credit account rotates the balance from month to month until it is paid in full. Any revolving balance is subject to interest charges. As the money is repaid, the difference between the maximum credit limit and the current credit limit shrinks as you make payments. Revolving credit is most commonly seen in credit cards.


Charge Cards


This type of credit is frequently confused with a revolving credit card but charge cards are known to be more advantageous in not building credit card debt, unlike credit cards that allow for revolving credit. Charge cards don’t typically operate as regular credit cards as they require you to pay the complete balance every month. Charge cards usually don’t have a spending limit as well as no interest rate. Failure to pay the full amount by the end of the month may result in penalty fees. An example of a well-known charge card is American Express. Charge cards are known to be more advantageous in not building credit card debt. Charge cards are known to charge high annual fees while you can find credit cards with no annual fees and decent interest rates.


Installment Credit


Installment credit entails a fixed loan amount, a fixed monthly payment, and a fixed payback period. Interest rates are set in advance and factored into the monthly payments. Home mortgages and auto loans are two common types of installment credit arrangements.

Installment credit is also typically secure. Secure credit requires security for the lender. The borrower must provide collateral to guarantee loan repayment. If the borrower fails to repay or defaults on the loan, the lender may confiscate the collateral. A home is an example of collateral on a mortgage, and a vehicle on an auto loan. If the borrower were to default, the home or vehicle would be repossessed.


Non-Installment or Service Credit


This form of credit allows the borrower to pay for a service, membership, etc. at a later date. Generally, payment is due the month following the service, and unpaid balances will incur a fee, interest, and/or penalty charges. Continued non-payment will result in service cancellation and can be reported to the credit bureau, affecting your credit score. Service or non-installment agreements are very common in our everyday life. phone, gas and electricity, water, and garbage are all examples of service credit.

invest in bitcoin and stock market article for beginners

How to “SAFELY” invest your current stimulus check into Bitcoin and the Stock market.

This past year hasn’t been easy on anyone and we are still in the depths of the pandemic. Scams and phishing are at an all-time high. Security magazine conducted research in the year 2020, surveying several industry professionals and tracking new threats and state that overall malicious attacks have gone up by 53 percent. You can view their complete report and see their breakdown of how people are getting scammed and falling victim to these cyber attacks.


I think one of the main reasons that people are falling victim more so this time is because of the extra stress, stress from work, or stress of finding work, stress of providing for the family, staying healthy and not getting covid-19, etc. In 2017 there was a cryptocurrency scam, called Bitconnect. Bitconnect pulled one of the biggest exit schemes in cryptocurrency history, the founders walked with more than 1.5 billion of innocent people’s money, some had put their life savings in Bitconnect in hopes of getting rich. Sadly pyramid and Ponzi schemes are to take your money and not do what the portrait they were going to do.


CreditSage has taken to liberty to help you with trusted avenues to invest your hard-earned money. We have linked sources that are trusted and vetted by the government that you can safely trust and invest your money in. We picked Robinhood for stocks as it is one of the leaders in free stock trading and they give you a free stock to join. They are regulated by the government and have a really easy interface to get started in buying and selling your first stocks.


We picked Coinbase for cryptocurrency as it is an industry leader in the crypto space and is regulated by the government. It also has a very easy platform to use and has tips to get started in buying your very first cryptocurrency. 


We do advise invest with caution and only invest money you can afford to invest for the longterm and that’s why we advise you to invest your stimulus checks instead of spending it on materialist things you can plan for your future or any unforeseen events that lie in your future.


Platform for stock trading (simply click on the name)




Platform for crypto current  (simply click on the name)



Stay Home And Get Good Credit

The pandemic they say has been a great equalizer. Everyone going thru the same  uncertainty, every industry hit with the same crumble, and every country endeavoring to regularize the unseen situation. Nevertheless our  individual  credit score  has somehow remained  distinctly  singular to our habits. And there is no short cut to regain good credit but we can by all means better our credit by some best practices.

The pandemic has forced us to stay in doors and somehow our health , immunity  anxieties over fighting the virus has surpassed over the planned move to buy a new car, an expensive dress , a  voted purse or Jimmy Choo shoes. On a lighter note, stocking up on toilet paper was more rampant that booking those Air BNB at fantastic  discounts. This left us with a somewhat good opportunity to not spend so much on our credit cards and eventually stick to just essentials that tide us over the stay home period. That itself was an opportunity to align our credit spending powers to balance out. IE: work on our credit score  so that we are up and there when we are ready to spend again.

The first guideline would  budget your buying even if for essentials because other amenities spend has slowed down. And since you could do without that dress or purse these last four months, you can continue to do without it  until you re arrange that credit  score.

From April its been easier on the pocket than the same months last year or years before that. This would be good time  to reduce your number of credit lines  you have. Because the simple logic is the number of cards impact your credit score. It’s a good practice to always remember a credit card is  money lend by a bank to us. It works because we don’t want to carry cash , but it has to be paid back to the respective lender. That way we are on our toes and make judgmental calls not to bust the limit. Focus that in all eventuality we have to pay the source.  This way we stand firm from  liquidity perspective.

Cards mandatory ask  a 5% repayment expected on due date. That Is to keep in mind when we make our purchases. Simply because late payment fees are charged along with interest rates applicable and taxes. To avoid these extra burden on our repayment process. Its good practice to do the simple math every time you swipe that lucrative card on purchases way beyond our means. As its said, there are no free lunches neither are dinners or breakfast.  That’s another good snooze in your head while making those purchases when you are working to  aligning   your credit line.

Another attempt to save or repair your credit score, is to avoid cash withdrawals on your credit cards. The financial charges on these are way higher than we  can calculate in case  you are one of those who make minimum payment of your cards. Cash withdrawals on credit card is never is good exercise .Period. This brings us to the next step  is always try and attempt to make full payment on your cards. Credit cards offer us security in lieu of cash, hence the way they are utilized make us appealing  or reviling  to the lender. IE the bank or financial institution. This directly affects our credit  rating. Because customer spend behavior pattern is tracked by all lenders.

Another important  piece of advise before we wind up avoid using credit cards outside of your territory . The cards that are even touted as discount at international  usage; hit the holder with costly conversion changes, because spending in foreign currency influences the card to be swiped at the real time conversion along with levied charges that can be anywhere from 3% to 5 % or less depends on the  bank card you are using. But believe me no bank leaves this opportune to make more money out of the card holder.

Even the pandemic cannot stop  bills and EMI’s that are contracted  month in and out. Although a lot of finance houses are offering deferment in repayment. A wise move would be keep abreast of such places and really apply to them. Make a solid move to approach them, ask them if you fit the criteria and negotiate your  repayment plan, this is in case your credit is way busted  and in need of quick fix. Deferment now can only work if and only if you plan to stick with your budgeting . If you are not so sure on your cost to income (CTI) flow period on period annually. Work out  simpler terms for month to month on your own.

Last but not the least, work out your expenses spent on all cards put together between 25% to 40% based on your debt burden which is not imputed on the card. Like rent, school fees, etc. for Example: higher the EMI on a mortgage loan then exercise a 25% budgeting on  your cards limits put together. If you run lower cost on your living expenses then can keep on 30% which is a sweet number in all probability.

To sum up the best practices, always remember, our cards are our identity to better credit and using them wisely makes us less susceptible and keep our neck above  credit waters.

Contributor: Beena Karkhanis


Credit Over The Years.

Very many years ago, more like eons ago. Credit was something that was rendered to the privileged few. It was as simple as a merchant giving credit to a person he/she could trust to pay him/her back. Anyone without the means, repute or modest could not get the much sought-after “credit”.

This simple concept of rendering credit progressed into making it available to each and everyone in a myriad of ways. Via multiple and diversified products such as credit cards, mortgages, automobile loans, student loans, etc. Soon, credit was not limited to just merchants. It spread to financial and non-financial institutions whose business was to lend money. And to be a person of repute or privilege was to be able to prove his/her ability and standing to get a loan and pay it back too.

This opened avenues of risk and control and lending became the need of the hour; from cradle to grave, because credit lives on in the family name well after. Not to mention the corporate commercial loan which also uses the basic concept of credit but with the method of amortization.

 Coming back to consumable retail/personal credit, it’s always important to understand that the eons old theory still remains at its core. That is, finance is extended to the person/end user who is known for his/her capability and ability to pay it back.

Then follows the concept of institutions making a profit during the repayment period, because the pursuit of profit is inherently what finance lending is all about. In today’s world improving your credit worthiness is as crucial as the healing of the ozone layer of the earth. So get those oxygen levels hiked up and start working on your credit worth as soon as you evaluate how your credit score infers. Since credit lines are worked and reworked on the income/spending and delinquency behavioral pattern of an individual. The more one spends carefully, the sooner one reaches the outstanding, well-revered credit score.

Contributor : Beena Karkhanis

Changing Times

Companies need to come out stronger and innovate in these difficult times. These are truly testing times that will test companies to innovate in their field.

Companies can have several departments work from home, let me tell you why that is going to change the face of the corporate world. Bear with me, we are going to dive into the nitty and gritty of it.

If it isn’t a cooperate office, companies barely invest in the property itself and choose to pay rent. Having employees work from home saves them thousands of dollars on rent a year and that’s just rent, less to no employees on a worksite will mean less usage of utilities and other perks that the company offers as well or even the basic necessities, like toilet paper or snacks.

You might ask yourself how much the company actually spends on office supplies itself per employee. Businesses with one to four employees spent $77 to $92 per month, Businesses with 40 employees spend $45 to $53 per employee per month and Businesses with over 200 employees spend $27 to $32 per employee per month and that’s just on office supplies. Companies that use more paper almost spend $1000 on average per month per employee.

On average an employee spends 26 minutes in commuting to work and 26 minutes back. That’s 52 minutes the employee loses in the day and doesn’t get paid for. Cost per employee really accumulates every month as you break it down for each employee.

Having employees work from home will have a lower carbon footprint overall as they don’t need to travel to get to work and they will also save time in deciding what to wear and they won’t be taking time to get dressed every morning if they are just logging into work from home

Having several departments work from home will save the company thousands of dollars, a year which can be put back into the business or increase salaries of employees.

Research conducted by business news daily and Stanford states that employees working from home increases their productivity, their breaks are more effective in refreshing them and helps them stay more productive more efficiently when working from home.

This crisis has really opened up our eyes to how inefficiently we can be operating in the world and how much more we can be productive and effectively use our resources, especially if it helps mother earth and humankind in the bargain while saving you money.

[Founder- Nicholas R.Fernandes]