Does Credit Benefit You?

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Credit has long been a part of our society and there will always be borrowers and lenders.  But does credit benefit you or hurt you in the long run.  If used wisely credit can benefit you but you need to know how to use it and learn what credit does for you and what it doesn’t.

Credit can be very helpful to you when it comes to purchasing larger more expensive items.  Often it is difficult without credit to get them.  What credit does is allows you to purchase the item with the promise of repayment over a period of time.  Credit does not mean that you get the item for free or that you do not have to pay back your financial obligation.  This is why safeguards are in place that will repossess the item if you default on your loan.  Credit does provide you with either a long-term loan or a short-term loan depending on what is purchased.

Credit does have some drawbacks besides your items being taken back by the lender.  Bad credit does go on your credit report for a number of years making it difficult for you to obtain further credit.  The idea of the credit report was to protect businesses from individuals whose credit is poor because they judge you based on your credit report score whether you would be a good or bad risk when it comes to lending to you.

Credit does improve with time if you are good about repaying your debts each month.  Your credit score will increase and the higher your score means the better your credit rating, the lower the score the poorer your credit rating.  You want to aim for a high score when it comes to credit.  

Credit does not mean that you can purchase anything that is outside your financial means.  If you can’t afford to pay for the item based on your income, lenders are not likely to extend credit for the item.  Get only those things which are needed and within your means.  This will go a long way in helping you to establish and maintain a good credit rating.  Often times, people get into trouble when they accumulate more debt than they can afford to pay.  Credit does not mean you can amass huge debts and then not pay for them.  You will always carry debt to some degree just make sure that the debt does not exceed your income.

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