Credit is essentially borrowed money. When you use a credit card or take out a loan, you are agreeing that you will borrow money now and pay it back later.
In addition to helping you make larger purchases, you need to use credit in order to build up a credit history.
In order to establish a good credit history, you'll need to make sure to pay your rent and bills on time, and keep your debts low. Paying off your debts is the best way to maintain good credit.
If you have poor credit, you'll have a harder time borrowing money.
Having poor credit can limit the choices you can make in your life.
Learn all this and more in Understanding Credit.
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Table of Contents
What Is Credit? 8
Why Do You Need Credit? 10
Different Kinds of Credit 12
Car Loans 14
Student Loans 16
Credit Cards 18
Other Loans 22
Good, Bad, & Nonexistent Credit 24
Building Good Credit 26
A Nontraditional Credit History 28
Managing Your Credit 30
What's a Credit Report? 32
What's a Credit Score? 34
Check it Out 36
What if There's a Mistake? 38
Why Does it Matter? 40
Protecting Your Credit: Paying Your Bills 42
Protecting Your Credit: Budgeting 44
What's Identity Theft? 46
The Dangers of Credit 48
What if You Have Bad Credit? 50
Raising Your Credit Score 52
Living Without Credit Stress 54
Here's What You Need to Remember 57
Words You Need to Know 58
Further Reading 60
Find Out More on the Internet 61
Photo Credits 63
About the Author and Consultant 64