Credit is important nowadays simply because it is something you’ll need to keep moving forward in life. As you grow older and become more financially independent you’ll soon realize that credit revolves around you. But you may ask yourself how that is possible? Well think about it like this you’ll eventually want to buy a home, get a cell phone, purchase a new car, or even go to the bank and have them give you a credit card simply because it’s an easier way to purchase that way you don’t have cash on hand. For all of these things, you’ll need credit, and that too a good one.

A lot of people may understand what credit is, in short, it’s just borrowing money. And this money will allow you to make any type of purchases you’ll need. Credit may be great but in the long run too many people if you abuse this privileged you can have a negative impact on you when you’re ready to take on those new Milestones that come into your life.

So how about we take a look and see what credit is all about. If you are looking for credit repair services give us a call at 1-888-8888.

A Quick Breakdown

Too many of the mutual understanding of credit is borrowed money. Which in reality is actually correct you can use this borrowed money to purchase goods and services when you need them. You can give credit through banks or any type of lender as long as you agree to pay them back within a given time frame. Of course, during these pit payment periods, there could be an agreed-upon interest rate that you’ll have to pay on top of the money borrowed.

Almost everyone uses credit, but the way one uses credit can be different in every scenario. Let’s take a look at the three most common ways people use credit today.

  • Using a credit card to make purchases and then paying off the balance later or making minimum payments
  • Taking out a credit loan to consolidate debt
  • Using the credit to pay for larger purchases such as a home or car

While these are examples of the most common ways credit is being used today, each one of these has their own borrowing terms and interest amounts that you will need to find out through your lender.

So when you are looking for credit there are four major types you should be aware of being you decide to take out a loan or use credit cards.

Revolving Credit. Like the name States, a revolving credit account enables you to roof all the spending so you don’t have to pay the full balance from month to month. You are given a maximum credit limit where you are able to make charges up to that amount and you can pay the balance off slowly. Credit cards are one of the most common forms of Revolving Credit.

Charge Cards. Like credit cards, charge cards allow you to purchase goods and services up to the present limit that was given to you. The only difference here is that with charge cards you are required to pay the full balance back each month.

 

Installment Credit/Loans. These types of loans are where a creditor loans you money usually a specific amount where you agree to pay the money back over a specific period of time. If you decide to mortgage a home or purchase a vehicle and take out a car loan, these are considered installment loans or installment credits.

 

Service Credit. These are agreements made between you and a service provider such as a cellular company or a gym membership. Usually, these types of agreements are not recorded on your credit history, although if you fail to pay on time it can be reported to a debt collector. If that happens, it can negatively affect your credit score.

Today’s society heavily relies on credit to stay afloat. Credit is necessary for everyone window decals many people do not have the cast photos to make such large purchases such as a home or even a car. For you to receive credit, it is based on your credit history as well as your ability to manage credit in the past. The amount of credit you are eligible for is reliant on the lender’s assessment on your credit history. Based on your credit score after the assessment, this will determine how much credit you are entitled to as well as how much you will be paying in interest rates.

Credit can be your best friend or your worst enemy. American consumers use credit to buy almost every single thing this includes, food, clothes, house, cars you name it anything and everything is almost put on credit. Although it’s great it can cause a lot of people to live outside of their means, where they are unable to control their credit spending and could be overwhelmed with piles and piles of bills.

If you already know your credit situation and are looking to fix your credit report call us at 1-888-8888.