Back to Basics – Credit

We’ve been talking about different types of debt for the last few weeks; credit cards, mortgages, auto loans, etc. We’ve focused on the differences between these types of debt but today we’re focusing on something that they all have in common: credit.

Your credit is just an estimate of your ability to pay back a loan you’re given. That’s it. It’s how potential lenders like mortgage companies or credit card companies try and decide who should be given what loans and at what interest rates. You’ve probably heard of credit scores and credit reports. These are just ways of trying to summarize your overall “credit” in a standardized format. They’re not perfect, but they are the system we have so it’s important you understand how it works and what a difference it can make to you in the long run.

Over the next few weeks we’ll cover credit reports and credit scores, but for now remember that credit is just an educated guess at how likely you are to be able to repay a loan. If you have questions about credit you’d like answered you can let us know at ask@brightdime.com or you can schedule a meeting with a BrightDime coach!