Do you know what the term credit actually means? The word credit actually has its origins from the Latin root word called credo.
This means I believe and the main point of credit is determining whether you are trustworthy or not.
Do you make and keep your promises? Can people believe in you to pay back the money that was borrowed (credit cards and extended credit terms)? Today's more accurate definition of credit is: 1.
How reputable a person is in terms of paying their bills, financial obligations, or loans.
2.
To be honorable and trustworthy, as in keeping their promises made for whatever product/terms were agreed upon.
3.
Credit is the allowance, or permission, given to a customer from the owner of a product or service, that enables that customer to have or use these goods and pay for them at a later date.
Sounds Good, Right? Now by reading the above 3 definitions of credit it sounds like the ideal situation to be in, right? What person does not want to be considered a man or woman of honor, trustworthy, and dependable? We all do.
But the ironic part of the entire credit world we live in is that most people do not look at it this way.
Instead, they use and abuse their credit as if it was their right to.
They do not consider credit to be an extension of their character.
They become untrustworthy, if you will, to the eyes of every merchant, big or small.
How does this happen? Well in no uncertain terms am I accusing you of purposefully harming or doing something wrong by over-extending your credit, or by having bad credit.
It happens.
Unfortunately, by the time credit repair becomes an issue, the damage has already done and in the eyes of merchants and credit boroughs, it takes years to build back up your credit score.
Sticking With The Concept The basic principles of credit is simple: You get something today for your promise to pay for it at a later date, in whole or in parts.
This does not mean that your income is increased by having credit.
Rather, it allows you to spend money that you have already saved up or spend money today that you know you will have in the near future.
Businesses LOVE issuing credit.
Why? Because people spend more! And that is the trap that all too many individuals fall into.
In order for these creditors to make as much profit as they can it is important to them that you and I put as much of their products or services on credit as possible.
The goal of the credit issuer, whether it is a credit card company or a business in your local town, is to get you to spend as much of your future earnings as possible, if not more.
Great plan right? Well it's great for the businesses but it can be a terrible situation for people that cannot control their spending.