The importance of credit and debt

[cred•it] noun: Credit refers to the ability to borrow money. Some forms of credit commonly used by consumers are car loans, home mortgage loans and credit cards. Those who can borrow money at a reasonable rate of interest are sometimes said to have good credit, while those who cannot borrow such amounts at such rates are said to have bad credit. Debt is money owed to someone else.

Credit can play an important role in your life, but it can also lead to a heavy debt load and a bad credit history that takes years to improve. Whether you’re considering different credit options and want to stay on solid financial ground or have already accumulated debt and want to dig yourself out, understanding the basics is important to successfully managing your finances.

[cred•it] noun: Credit refers to the ability to borrow money. Some forms of credit commonly used by consumers are car loans, home mortgage loans and credit cards. Those who can borrow money at a reasonable rate of interest are sometimes said to have good credit, while those who cannot borrow such amounts at such rates are said to have bad credit. Debt is money owed to someone else.

Credit can play an important role in your life, but it can also lead to a heavy debt load and a bad credit history that takes years to improve. Whether you’re considering different credit options and want to stay on solid financial ground or have already accumulated debt and want to dig yourself out, understanding the basics is important to successfully managing your finances.

Credit & Debt Resources

TIP: Follow the 20/10 rule. Credit cards are loans; never borrow more than 20% of your annual net income and don’t let payments on those loans exceed more than 10% of your monthly net income.

Federal Trade Commission (FTC) (Credit & Debt)

Money Matters. Using tried and true strategies for dealing with money—or the lack of it—can make a big difference to your present and your future. Whether you are saving, spending, or borrowing money, the FTC has information you can’t afford to overlook.

MyFICO (Credit & Debt)

The FICO® Score is a number that summarizes your credit risk. Lenders use it to make credit decisions, such as the interest rate you’ll pay when you apply for a loan. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions. Make informed credit decisions with MyFICO. Learn more about checking your FICO score and compare products.

AnnualCreditReport (Credit & Debt)

Fight identity theft by monitoring and reviewing your credit report. You may request your free credit report online, request your report by phone, or request your report through the mail.

National Foundation for Credit Counseling (NFCC) (Credit & Debt)

As the nation’s largest financial counseling organization, the NFCC Member Agency Network includes more than 700 community-based offices located in all 50 states and Puerto Rico. NFCC Member Agencies provide financial counseling and education to millions of consumers each year in person, over the phone, or online.

FDIC (Credit & Debt)

The Federal Deposit Insurance Corporation (FDIC) has information and resources to education and protect consumers. For a listing of Frequently Asked Questions for Consumer Protection, visit their website.