What is credit? Why it is important?
Answers
Answer:
Credit is part of your financial power. It helps you to get the things you need now, like a loan for a car or a credit card, based on your promise to pay later. Working to improve your credit helps ensure you'll qualify for loans when you need them.
Explanation:
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Credit is part of your financial power. It helps you to get the things you need now, like a loan for a car or a credit card, based on your promise to pay later. Working to improve your credit helps ensure you'll qualify for loans when you need them.
Many aspects of life are affected by credit ratings. They may:
- Determine whether a lender approves a new loan.
- Influence your interest rates and fees on the loan.
- Be reviewed by employers before they offer you a new job.
- Be used by landlords when deciding whether to rent to you.
- Determine your student loan eligibility, including most private loans.
- Be reviewed by insurance companies when you apply for many types of insurance, including car or homeowners insurance.
- When consumers and businesses can borrow money, economic transactions can take place efficiently and the economy can grow. Credit allows companies access to tools they need to produce the items we buy. A business that couldn’t borrow might be unable to buy the machines and raw goods or pay the employees it needs to make products and profit.
Credit also makes it possible for consumers to purchase things they need. Many items, from cars to houses, are too expensive for most people to pay for all at once. With credit, it’s possible to pay over time while accessing essential products and services when you need them.