Credit History and Credit Use

Question: Credit history never seemed an issue with my parents. In today’s world focused so heavy on the use of credit cards and credit in general… any ideas on the best way use credit on a daily basis? Katy, Boston, Mass

Answer: Mass production throughout the world, the American standard of living along with our taste for consuming would not have been as easy for Americans to acquire without consumer credit.

However…

The government and as individuals, we have lost our way in the use of credit and managing money.

From an individual viewpoint, credit should be used only when coupled with intention and a definite plan. A plan of eliminating the debt as soon as possible and not always living in debt – debt free is possible! Most people do not think of themselves as slaves, which they are when they owe someone a debt. Our parents did not want to be put in that position or “owing someone.”

Consumers need to gain more knowledge and understand the proper use of credit. You do not have to understand every law and detail that applies to using credit. Actually, when you deal with reliable companies, you do not have to be a lawyer nor carry a law book.

The key is to use “credit” wisely and when it is to your advantage – not when you “need” something to fill a void. Credit should not be used unwisely or when its convenience makes you “overload”, put pressure on, or places you in a position your are unable to meet your financial obligations. Or places you in a situation where you must deal with unreliable concerns whose charges and practices are unfair or illegal.

Good Credit a Personal Asset

Good “credit” is a personal asset. You create and maintain your credit history and standing. It can be improved by your trustworthiness and character, by your performance of payment, and by your total capacity to pay.

In general, you may choose your method of financing, credit card, writing a check from a home equity line of credit, conditional sales contract, or similar contract, cash loan from bank, small loan company, finance agency, credit union, by mortgage loan, borrowing on collateral, on insurance, etc. Satisfactory credit terms can be obtained by any person who has a good credit rating. It is those people who do not have a bad credit record or who do not know and understand the basic facts, terms, and obligations, who usually are usually the ones who become trapped in unfair or illegal credit transactions.

Doing business on a cash basis has advantages also. It saves credit costs, for example. Most people, however, cannot do all their business on a cash basis. In fact, wise use of credit helps you to build and protect a savings account. In turn, a savings account enables you to buy for cash or to obtain most favorable credit terms.