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It doesn't mean "free money"; credit is money you borrow that must be paid back!

When someone lends you money that must be paid back with interest, they have "extended you credit." Interest is the cost of borrowing money - it's the extra amount you pay back for getting and keeping the loan.

If you've already opened a bank or credit union account and you have a budget that you follow closely, then you're ready to start working with credit. It's a bad idea to get a credit card or loan without having a budget.

When you make payments on time, that information shows up on your credit report. If you miss a payment, you'll be charged late fees and late payments will show up on your credit report too. Your credit report follows you where ever you go and can affect your ability to get a home loan or vehicle financing, get student loans, or get a loan to start up a business. The best way to avoid getting into debt is to cut down the number of shop credit cards and bank credit cards you have. If you do have a credit card, don't take it with you when you go shopping unless you are specifically planning to use it, and have budgeted for it. Having a credit card handy makes it easier to 'impulse buy' and spend money you don't really have spare.

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Of course when you borrow something you have to return it but it also depends on your negotiations. - Marla Ahlgrimm


A credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately, but instead arranges either to repay or return those resources at a later date. Fannie Mae, the government-backed home loan insurance company, has achieved a milestone. After receiving billions in taxpayer resources to stay afloat, Fannie Mae has published a significant profit and promises to not take another dime in federal resources.