What Is Credit?
Credit is the doorway to your buying power and credibility; without having credit, reaching most of your needs or wants will be very difficult.
If you Google the word “credit” it will probably come back with the below meaning:
Credit – the ability of a client or buyer to acquire goods or services before making payment, based on the trust that payment will be made at a later time.
Credit is the ability to get something now, and then pay for it later.
Like with an auto loan, your credit standing will let lenders know if they can trust you to make the agreed upon bi-weekly or monthly car payments.
If the lender gives you some money now for a vehicle and trust that you will pay back the loan over the agreed upon term length, they have just given you credit.
This is what credit card companies and other lenders are also doing, for a fee. They are trusting you, based on your credit standing, that if they grant you access to a certain amount of credit, you will honour the agreement set and pay it back with any additional charges.
Two Parts of Credit
When it comes to credit you will be dealing with two parts: Your Credit Report and your Credit Score.
Your Credit Report
Your credit report is basically the entire picture of what is on your Credit. It’s like the report card you received when in school where everything you have ever done in class is listed, in a credit perspective “borrowed”, or any type of credit account you have opened with a bank, store or any lending institution.
The information on your credit report is what make up your own unique credit score, which is the second part of your credit.
Your Credit Score
Your credit score is a number ranging from 300 to 900 (depending on the selected credit scoring system such as Equifax) that is assigned as a grade based on your own overall credit report.
The better your overall credit report, the higher your credit score or rating. If your credit report has negative items on it such as missed or late credit card payments, you will have a lower credit score.
Therefore, the better your credit report and credit score are, the more chances you will be able to borrow from lenders and at a better rate.
At Right Turn Auto Credit, we not only help people get car loans with various credit challenges, we also guide them on how to rebuild their credit.
With years of experience and thousands of credit applications received, we’ve seen all types of credit reports and scores. This makes us as highly qualified to better serve our customers.