Episode I - What is Credit?

'In a galaxy far, far away evolved a dangerous but manageable ruler called DARTH CREDIT.

CREDIT was, and still is, a privilege and not a right. It was the knowledge gained through the tireless efforts of a young Jedi named ZIPPITY that he learned…. the key to maintaining good CREDIT was knowing the cost of using it and learning how to manage it."

First of all we need to define the concept of CREDIT; 'credit is an arrangement to receive or access cash today and pay tomorrow'. This sounds appealing but it can lead to very scary things.

Personal CREDIT comes in a variety of shapes and sizes and it's very important to understand that you have to pay for this privilege.

First lets explain the difference between fixed credit and revolving credit:Fixed credit comes in the form of loans such as mortgages, car loans or small personal loans. Fixed credit requires that you provide a guarantee that you will re-pay the amount of credit you are using. You will pay your institution for the use of this money for your purchase, this is called interest. Revolving credit comes in the form of credit cards or a line-of-credit. You will also pay for the use of revolving credit but you will find that it is very pricey to use this form of credit since there is little or no security given by the person borrowing.Since there is no guarantee of repayment, the interest charged to obtain this form of credit is very high.

So, as you can see CREDIT will come in a variety of shapes and forms and it is vital to understand the cost of using it before you are granted access to it

 

.Episode II - The Cost of Using Credit