About Credit Management

Credit is the act of granting a loan by one party to another party. The first party is called a creditor (the party loaning the funds) also known as the lender and the second party is called the debtor or also known as the borrower. The debtor agrees to repay or return the funds to the creditor at a later date. The creditor and debtor agree to the terms of repayment and the amount of repayment which will usually include the full amount of the loan and a predetermined amount of interest. The debtor usually does not repay the creditor immediately, but repays the creditor in agreed upon installments that usually include principal and interest until the loan is paid in full.

Credit is usually granted by the creditor with the borrower's ability and intention to repay as the determining factor. Consumers use the credit they have with financial institutions, lenders, businesses and individuals to obtain loans. Consumers usually use the credit issued to buy goods and services. The credit report and credit score a person has typically determines how much they will be permitted to borrow, for what purpose, for how long, and at what interest rates.

There are two key factors to determining issuance of credit. The first factor being a person's income is an important indicator of a person's ability to repay, particularly when compared to the amount of debt they have to income. The second factor is their credit score and their past borrowing history. A person who has already had credit and how well they handled repayment is also a good indicator of how they will pay and their intention to repay the credit issued.

Responsible use of past credit is a key factor in obtaining credit in the future. Responsible use of credit also refers to living within your means. You should limit the amount of credit you request to make sure you can comfortably afford to pay back the loan.

Borrowing may be justified for major purchases like homes, automobiles, education, home improvements or any other purchases that have value lasting beyond the time it will take to pay the purchase off in full. Credit also revolves around your family's budget and how much you can afford to devote to paying your loan payments. This credit management section provides you with valuable information about credit and how to use is wisely. This credit management section also provides you with resources and the tools to achieve credit success and credit worthiness.

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