Instructor Goss
F1201 105

15 December 2012

Establish Credit/Rebuilding Credit
The world seems to run on credit nowadays. Many of us have school, car and even home loans. And we likely all have one or more credit cards in our wallet. The problem is we don’t give credit the amount of thought we should.
For the average blue collar worker, most of us aren’t bringing in the kind of income which allows us to pay for everything in cash. Therefore at some point in our life, we will start to apply for credit. For many of us, this usually occurs in the form of a credit card. Credit cards have been around since the early 1950’s. What may have seemed, like a rare commodity back then, they are a commonality in today’s economic environment. Today there are over 609.8 million credit cards held by U.S. consumers. The average number of credit cards held by a cardholder is 3.5 and the average credit card debt per household with credit card debt: $15,956 (Woolsey & Schulz). Credit is simply, borrowing someone else’s money to purchase goods, services, and cash or leasing items with the intent to pay for them in the future (Kapoor, Dlabay, & Hughes, 2010). One reason the credit card usage has increased in popularity, is because they are accepted by nearly, every type of business imaginable and worldwide. Some companies almost prefer this type of payment over other forms, such as checks, money orders and in rare cases cash. Especially when buying plane tickets, car rental or making hotel reservation. Many consumers are known for using them to make day-day purchases, for entertainment and in the case of emergencies. Regardless of what the cards will be used for, there are many things that should be considered when determining to establish credit.

There Are 10 Steps To Building Credit

There are two type of credit open-ended and closed ended. In general there are two types of credit closed-end and open-end credit. Close-end credits consist of a one-time loan in which you agree to payback the loan in a specified period of time and in equal payments. Such as, a student loan of $20,000, interest payment of $4,000, will be paid back in 20 years with payments of $200 per month. Other examples, of close-end credit are mortgage loans, car loans, and installment loans for purchasing furniture or appliance (P175). Open-end credit is sometimes called a revolving line of credit. This type of credit is probably the most popular and the easiest to attain than close- end credit. Some instances of this particular kind of credit are, store credit cards or home equity loans. The consumer is usually billed monthly for at least partial payments. Additionally finance charges are associated with this loan.
Both “open-ended and close-ended credit exists to provide flexibility to people who need different financial products. Depending on the amount of money you need, the assets you own and the terms you are willing to accept, one type of credit may work better than another” (Marquis).

. I remember when, I started out building my credit. I would fill out numerous credit card applications from department stores, and businesses like Home Depot, Discover, and American Express. Unfortunately, for me each response came back denied. Mainly because I was young, just starting out and hadn’t established a pattern of trust, among creditors. This basically meant no one would loan me money, in good faith, because they didn’t know if I would pay them back when the bill came due. But today creditors are a little different; you can find many are standing in line luring unsuspecting college students and young adults into getting their credit card. With the grand illusion of charging necessities items and entertainment, while establishing credit. Although there is logic behind their reasoning, greed is perhaps more the reality. Since my younger days, I have learned more about building credit. There are