How much do i know about my credit?

2007-03-08 10:33:40

( Financial )



Everyone's Credit plays a huge role in everyone's lives. I use my credit to avoid handling cash to most of my transactions. I also use it when I need cash advances. In a more practical sense people use it to avoid hassle or as a desperate measure to acquire or maintain their needs. Our basic idea of how Credit works is being allowed to "borrow" and return it later, but what do we really know about the technicalities involved in borrowing.

How credit works

An individual or a company has a history of dealing with the bank. All of their business transactions are checked and verified with the various banks that they are involved in. They also run a credit check to see the past records of the company or individual because they might be blacklisted. With this information they determine how much money they can lend and how long an individual or company can pay. There are also collateral credits to lessen the bank's fear of losing money. A client will mortgage a property or business to borrow money. The bank really earns a lot through interest in its credit. They create a lot of revenue from it.

How I properly use my credit

Now that i have given you the info on how credit works, there are certain ways I use my credit in order to maximize it. I would have to state the first and most obvious, I make sure that I can pay off my debt. This determines my credit score and allows me to continually borrow when you need to. The next rule in using credit is checking the interest rate and hidden charges of the card company you are applying to or currently using. Knowing this information allows you to prepare and avoid being charged with dubious transactions.

This will also allow you to see whether you should continually use or apply to the credit card company that you chose. It is also essential that you try your best to pay your credit fully so you will not be charged with interest. All of these tips will help you avoid problems with your credit


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