Unsolicited offers of pre-arranged credit arrive in the mail. A wealth of goods and services can be purchased over the telephone by charging to a credit card. Although consumer credit is easy to get and use, a responsible approach, using common sense, to using credit is necessary to prevent overspending and purchasing of impulse and unnecessary items. Knowledge of basic credit terms is essential to being an informed consumer. Credit is a broad term used to describe any situation where goods, services, or money are received with payment to be made in the future.
Credit is a form of trust established between a lender or creditor and a borrower or debtor.
A lender or creditor is the person or business to whom the money is owed. The borrower or debtor is the person who owes the money. In its simplest terms, credit allows a consumer to use goods or services in the present, and holds the consumer responsible for paying for them in the future. Families headed by younger persons use credit cards more than families headed by older persons. Young families with children have the greatest credit use.