There are many legal definitions for credit, but the bottom line is that credit means borrowing money from a lender to pay something off. You can borrow from a bank, retailer, or mortgage company. The person you want to borrow money from extends credit to you.
This means that they will allow you to have a product now that you will pay for later. When you borrow money, you make an agreement with the lender about how you will repay the loan.
Also, you will typically pay back a loan with interest. This is a percentage of the original money you borrowed that is added to the loan. Adding interest charges is how a lender makes money.
Credit can be both a blessing and a curse. Most people couldn’t afford a $150,000 home upfront. However, many can budget monthly installments to pay off a mortgage. The same is true for buying a car. Credit can also help you in an emergency. For example, when your car breaks down and you need to put your car repairs on a credit card.
To many, however, credit seems like “free money.” You want a new outfit or some new sports equipment, but you don’t have the cash in your bank account. It’s so easy to get a credit card and get what you want now, but pay for it later. Unfortunately, if you consistently spend more money than you earn, you can get into too much debt.
While a house is generally considered good debt, if you borrow money for a house that you really can’t afford, you’ll be in the same boat. You may end up falling behind on your payments or even foreclosure.
If you’re already in the position of having bad credit, then you know how easy it is to fall into the credit trap. You may feel overwhelmed and even feel like there is no way out. Also, it is hard to know where to turn for help.
Talking about problems with your finances is usually not comfortable. In fact, many people who appear to be living large are actually drowning in debt, but you would never know it by looking at them.
To download your copy of “The Free Credit Repair Kit – Version 2006”, you can visit my website at http://www.fixitcredit.com.