When you buy something on credit, you take possession of your purchase now and pay for it in the future. At its heart, credit is based on trust – the lender trusts your ability and intent to pay. Your credit history shows how you’ve handled credit in the past, and suggests how well lenders can trust your ability and intent to pay in the future.
Credit allows you to buy something, such as a new washer, a car, or even a house, while promising to pay for it from future earnings. Credit can also give you access to cash in an emergency, and enable you to consolidate debt to better manage your finances.
Contents
What is consumer credit?
Should you use credit?
The pros and cons of using credit
Types of credit for everyday purchases
Understanding charge cards
Understanding credit cards
Saving money on credit cards
Safeguarding your credit cards
Types of credit for major purchases
Personal lines of credit
Installment loans
Sales finance contracts
Automobile loans
Home equity loans
Shopping for credit–compare costs and save money
Shopping for credit–assess your insurance needs
Where to borrow money
Establishing credit–how to get started
Establishing credit–using credit responsibility
Glossary of financial terms
