Today is the start of a 6 part blog series on credit. Credit is a very importance part of one’s personal finances. So, exactly… what is credit?
Credit is a concept that plays an essential role in our financial lives. Think of credit as a form of financial trust. When you borrow money, whether it's from a bank, a credit card company, or another lender, they are putting their trust in you to repay that money. In a way, it's similar to borrowing a book from a library.
Imagine you want to borrow a popular book from the library. The librarian lends you the book because they trust that you will return it on time. Similarly, lenders provide you with money or credit because they trust that you will repay it according to the agreed terms.
Just like the library keeps track of your borrowing history, there is something called credit history in the world of finance. Credit history is like a report card for your financial responsibility. It shows how you have managed credit in the past, including your borrowing and repayment behavior.
Lenders use your credit history to evaluate how trustworthy you are when it comes to borrowing money. They want to ensure that you are likely to repay the money they lend you. Your credit history can impact your ability to get loans, credit cards, and even affect things like renting an apartment or getting a job.
Understanding credit and building a positive credit history is crucial, especially as you start your journey into the workforce. It's like establishing a solid foundation for your financial future.
