WHY DO MIGRANTS NEED TO BE FINANCIALLY LITERATE?

As migrants, we have to shoulder many responsibilities. Adapting to a new culture, learning the system, adjusting our families to new schools and neighborhoods, and the list goes on. But what many migrants forget to prioritize is the act of becoming financially literate, so they can maneuver the financial system in a way that empowers them to make smart financial decisions.

The first step towards becoming a financially savvy migrant is to learn the lingo that is often associated with financial services and institutions. This will help to reduce the frustration that is felt by many when they don’t understand the financial jargon being tossed around, and reduce the potential for becoming a target of scams that prey on the vulnerability of newcomers.

Here are some definitions[1] that you can loop back to over the course of this blog series:

CREDIT LINGO

•       A FICO score is a credit score that quantifies and evaluates an individual’s creditworthiness. FICO scores are used in more than 90% of the credit decisions made in the U.S.
•         A credit history is a measure of your ability to repay debts responsibly. Migrants will be rewarded for having a good credit history, such as being offered lower interest rates on mortgage loans and car insurance.
•         A secured credit card is a type of credit card that is backed by a cash deposit from the cardholder. Consumers typically obtain secured credit cards to improve their credit scores or establish a credit history.
•         An unsecured credit card is a type of credit card in which nothing is “securing” your ability to pay off your accrued balance, which is money that you owe to the credit card company. With a standard, unsecured credit card, no deposit is required.
•         Revolving credit is an agreement that allows customers the flexibility to access money up to a preset amount, known as the credit limit. Credit cards and lines of credit both work on this principle.
•         A hard inquiry is often used by lenders and creditors when deciding whether they should loan you money or not. These inquiries can often decrease your credit score and stay on your credit report for up to two years.

In reality, credit worthiness is often predicated on having financial literacy skills. When you put these definitions into action, so you can put your financial knowledge to use right away. Continue your education with InstaKin as we review more essential vocabulary in the next blog.

[1] https://www.investopedia.com/