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What is Credit?

Credit is essentially money given by a lender to a borrower, in exchange for a promise of repayment, usually over a long period of time. Good credit gives the individual the ability to purchase goods, which they probably would not otherwise be able to afford. Or borrow money for large purchases such as an automobile or a home. Credit allows you to purchase an item such as a home or a car, and pay for it by making small payments over several years. In exchange for the lendor making this arrangement, you agree to pay 'interest' in addition to the original amount you borrowed.


Why is Credit Important?

In today's age of information and computers, your credit report is available to creditors almost instantanously at the push of a button. Credit agencies dont really think of you as a person; but as a credit file or a number.

Credit grantors use various mathamatical formulas to determine your credit rating. This is based on factors such as how well you have paid debts in the past, if you've missed payments, your length of employment, how long you've lived in the same place, and many other factors. . Your credit history is a measure of how reliable you are when it comes to paying your bills. Your credit rating established over time by your previous payment patterns.

A credit report which includes information such as your address and employment history, repayment history and salaery histroy, represents your financial habits in the past 10 years or so. A good credit rating can be difficult to obtain, and very easy to ruin.

 



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