What is Credit?
Like the credits at the end of a movie, our financial credit is often ignored. When discussing credit most people think about credit scores thanks to various commercials. Yet, credit is money or services borrowed that we agree to pay back. This includes but is not limited to credit cards, loans, and lines of credit.
The four types of credit are:
- Charge Cards are credit cards that can’t carry a monthly balance.
- Charge Cards are credit cards that can’t carry a monthly balance.
- Installment Credit is loans with agreed payment terms (student, auto, mortgage, etc).
- Service Credit is bills we agree to pay for service (water, electricity, internet, etc).
When we don’t understand the purpose of credit, we can abuse it or use it wrong. The purpose of credit is to make attainable now what is not, and it should help increase your income. For example, one would use student loans to get a higher paying career. Credit is a necessary part of life and comes with great responsibility to manage. Remember that credit is money or services borrowed that we agree to pay back.
Be WIZE with MONEY