What is Credit?
 Credit,
derived from the Latin word "creditus"
which means "to believe" is defined
as trustworthiness or credibility.
Credit allows you to buy things you might not be able to afford all
at once by letting you pay over a period of time.
As our society moves further away from cash, your daily finances become
more dependent on credit. By way of trust and credibility, our economic
society works more smoothly and conveniently.
The credit system is open to all. If you choose to use credit with
good responsibility, its power will increase with use. If you misuse
it, the power will decrease. Like anything based on people's faith in
each other, credit is both a fragile and a precious thing.
How to build a credit history.
The way credit is established today is by building a history of borrowing
and timely debt repayment. The best thing you can do is to borrow some
money and pay it back on time. If used responsibly, the credit card
is certainly a good tool for establishing your credit and has its advantages.
It's more widely accepted than a check and much easier to carry around
than cash. It also comes in handy when you need funds in an emergency.
Why is a Good Credit Rating Important?
Your credit history is going to be reviewed every time you apply for
credit, to make a major purchase such as a car or house, or when you
lease an apartment. A poor credit history can cause a business to deny
you credit. If you declare bankruptcy, this can be on your credit report
for ten years. Information about a judgment or lawsuit against you can
be reported for seven years or until the statute of limitations expires,
whichever is the longer period. Good credit opens many doors to opportunity,
whereas, bad credit closes those doors.
Your Credit Report
Your credit history, a record of your current and previous payment
patterns pertaining to your credit promises, is contained in a file
which is maintained and sold by a credit bureau. If you ever applied
for a credit or charge account, a personal loan, insurance, or a job,
then you have a credit record on file at a credit bureau. A credit record
typically contains information on your history of paying your credit
bills, your income level, and the amount of your debts.
You should check your credit annually.
Sometimes people think they have good credit. Then they apply for a
loan and are surprised to learn that there are
some problems with their credit. The best way to find out if you have
good credit is to get a copy of your credit report. It's a good idea
to order your credit report once a year to make sure there are no errors
on it. If there are errors or outdated information on your credit report,
it could hurt your chances of getting a new loan. Studies have shown
that many credit files contain inaccuracies that can harm your credit
rating, leading to rejections when you apply for loans, insurance, even
a job. Often the result of simple human error, they can be caused by
anything from a clerical error to a computer glitch in which your file
is mixed with that of someone with a similar name. It pays to check
your credit report regularly.
More Information:
 Credit
Report
How
to Get a Credit Report
Credit
Bureaus
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