The word “credit” is derived from the Latin word “creditus” which means “to believe.” Credit is defined as trustworthiness or credibility. Credit provides you with the opportunity to buy things you might not be able to afford all at once by letting you pay over a period of time.
Over the last few decades, society has been more and more rapidly moving further away from physical cash, the finances of every individual have concurrently become more and more dependent on credit. Through this evolving system of trust and credibility, the economy of our society is improving in efficiency and convenience.
Another wonder of the credit system, is that it is open to everyone. As long as the credit system is used responsibly, the power of the user can only increase. It is in the wisdom of the use of credit where the strength lies. However, the opposite is also true: where credit is misused, power is also lost. Just as anything else which is based on a person’s faith in another’s trustworthiness, credit is very fragile and valuable.
Building a good credit history is key to being able to take full advantage of your credit. The best way to establish this, is to gradually build a record of borrowing money and paying it back in a timely manner. Therefore, it is essential to get an early start on taking out a loan on money and repaying it on time.
The easiest way to do this is, of course, with a credit card. Because you can take out very small loans whenever you wish, and repay them very easily. It is also more widely accepted than a personal check, and easier to carry around than cash, so it has added advantage.
A good credit rating is critical to being able to get the most out of the credit system. It will effect you in all of the major purchases of your life, including a car, a house, or even when you wish to lease an apartment.
A poor credit rating, on the other hand, can mean that a money lending institution will deny you credit. In fact, if you ever declare bankruptcy, it can appear on your credit report for ten years, for all of your potential lending institutions to see. Also appearing on your credit report, is information about a judgement or lawsuit against you; and this can last up to seven years (or as long as the statute of limitations in your area allows it to legally remain – whichever period is longer).
Good credit will open many doors of opportunity for you, whereas bad credit can slam these doors in your face.
Your credit history itself, is a record of your current and previous payment patterns having to do with your credit undertakings, which is all contained in one file which is maintained and sold by a credit bureau. In fact, if you have ever applied for a credit or charge account, a personal loan, insurance, or even a job, then a credit record has been created for you in a file by a credit bureau. Generally, your consumer credit report wil contain information about your history of paying your credit bills, your level of income and the amount of any debts you may have. You can get a free instant credit report on the internet.
You should check credit report on an annual basis is a wise move to keep you up to date with how you are being financially represented. Many times, people think that they have good credit, but are shocked when they apply for a loan and run into problems. The best way to learn about your credit is to receive a copy of your online credit report. Not only will you be better informed, but you can also be sure that there aren’t any errors there that may hinder you from receiving credit or loans. So it truly does pay to check your free credit report regularly if you have a credit monitor service available online.
Related posts:
- What is a credit rating?
- Why Do You Need a Credit Report?
- How to Get Your Equifax Credit Report
- An ounce of prevention . . .
- Information Provided With Credit Reports
FAQ: How do I check my Free Credit Report?
Your credit report is the basis for your financial standing. No matter how slick or smart you may be, no bank will touch anyone with a low credit score. It's their money, why would they want to take a bigger risk than they need to?
If you don't know where your credit report score is at, now's the time to take a peek. Don't get surprised with a low credit score when you go in to review your report with a potential lender or even an employer, find out for yourself within minutes.
