The reality is simply this: though everyone has the right to apply for credit, I must say, that not everyone should apply for credit, at least not until a person has a clear understanding of what credit is, what credit is for, develops a strong financial discipline and strong money management skills.
So, What is Credit?
- A formal definition is the ability of a person to borrow money or access goods or services from a merchant (seller) with the understanding that the person will pay the merchant at a later date.
OK… simple enough.
However, to get a deeper understanding of what credit is, I have to say that CREDIT is just another word for TRUST.
Think about TRUST for a moment.
If anyone has ever asked you the question: ‘So, how is your credit?’… what they are really asking you is… ‘Can I TRUST YOU to meet your financial obligation?’
Credit and TRUST Go Hand-in-Glove
Your Personal Credit is serious business and it is imperative that you be brutally honest with yourself BEFORE you even think about completing any credit application and definitely before signing any credit agreement.
There was a time when you had the opportunity, as a potential Borrower, to sit in front of a Loan Officer face-to-face, who had the authority to approve or deny your credit application, and if any negative remarks appeared on your credit report you had the opportunity to ‘make-your-case’ to the Loan Officer as to why you have negative remarks on your credit report, and also, what you intended to do to resolve these negative remarks, and believe it or not, the Loan Officer was in a position to offer you financial guidance that could help you to achieve a Better Credit Status.
In today’s world, with the growth of technology and Artificial Intelligence (Ai) credit decisions are made by computer algorithms, and the ‘human element’, for the most part, has been removed from the credit approval process, which is to say, that there is no longer a ‘face-to-face’ with a Loan Officer, and personal empathy or personal understanding is no longer part of the credit decision, and any financial guidance that may have helped you to build a better credit report is practically non-existent at the application level.
The credit industry has adopted ‘smart’ Ai technology and there is no point in trying to ‘hope’ that you get approved, because most every business that extends credit has online access to your personal credit report and your credit score, and for the most part, any lender will base their decision, on whether to approve or to deny your credit application, on the information that is on your personal credit report.
The ‘human element’ is no longer part of the credit approval process, and as a Borrower, you no longer have the opportunity to ‘make your case’ to a human being.
For this very reason, it is extremely important for everyone to do their level best to build such an impeccable credit history, that it leaves Ai Credit Technology no other choice but to approve the credit that you need, because you never know when you might need a line of credit to resolve an unexpected breakdown or an unexpected financial emergency.
When a merchant or a lender approves your application for credit, it simply means that the ‘machine’, or the Ai credit algorithms, have identified, based on the information within your credit report, positive elements of TRUST. These positive indicators show, that in the past, you have met your financial obligations and have built a financial reputation of repaying your creditors as agreed.
Now, sometimes, when a person receives an approval for credit, they are so excited that they never stop to consider the ‘cost’ of the credit, the interest rate, the fees, the terms and conditions, any potential penalties, and whether they can afford a long term commitment.
In their excitement, they quickly sign, without reading or understanding the credit agreement.
Sadly, shortly thereafter, a few months into the credit agreement, they lose their ability to make the payment due to some unexpected bad situation that is out of their control.
In my experience, this is usually the result of bad personal money management and also the lack of financial planning.
BEFORE signing a credit agreement a person should clearly assess their own personal financial situation as best that they possibly can and decide on whether it is wise to accept the terms and conditions of any credit agreement.
There are several factors that should go into deciding on whether to accept the terms and conditions of a particular offer of credit and we will explore this further on this website.
What is Credit Good for?
Credit means Opportunity.
Your Good Credit Report has the potential to open up so many doors of financial opportunity.
Employers want to hire and promote people with integrity and people that they can trust, and businesses want to do business and extend credit to people who have a reputation of repaying their financial obligations.
When establishing Credit you are establishing a foundation of TRUST, which future employers, creditors, and lenders, may rely on when deciding on whether to approve your application for a variety of financial growth opportunities, such as employment and/or promotion, a mortgage, an apartment, an auto loan, student loans, insurance coverage, certain state licenses, military service, and many other opportunities that require a high standard of TRUST.
Your Credit Report is your Personal Financial Report Card, which an employer, a business, and Ai technology, who are charged with the authority to approve or deny your credit application, will use to make decisions concerning your creditworthiness, which could determine the type and level of financial options that are available in the future for you and your family.
Though there are limits to how long a negative remark may appear on your credit report, this does not necessarily mean that you may not be negatively affected in some negative way in the future.
Exercising Financial Discipline
You know your own financial situation the best, or at least you should, therefore, the ultimate decision on whether you should apply for credit, or if you should even accept an offer of credit… is on YOU.
Now, I get it.
Sometimes we get into a desperate situation and we get in a hurry to get done what we need to get done, and when we are approved for a credit card, an auto loan, an apartment, or a mortgage, we are so excited that we are sometimes compelled to just sign the credit agreement and move forward, and sometimes, when we KNOW that we cannot afford the payment, we sometimes talk ourselves into signing the credit agreement anyway, all the while thinking to ourselves, ‘We’ll just figure it out.’
Well, exercising financial discipline simply means that you are able and willing to walk away and say ‘NO’ to an offer of credit that you really want, regardless of how badly you may actually need the credit, because you either do not fully agree with the Terms and Conditions within the credit agreement, or you KNOW that you cannot afford to make the credit payments.
Credit Agreements and Credit Contracts are legal documents and they must be taken seriously.
BEFORE applying, accepting, and signing a credit agreement, it is best for you to have a cash reserve set aside so that you can cover a bad financial event.
In my past line of work, I had to bear the heartbreaking responsibility of having to file eviction notices, file judgments, enforce foreclosures, execute auto repossessions, and complete wage garnishment orders.
None of these duties were pleasant for me to do, but it was part of my job.
Goodwill Credit has become personal for me, as I have met hundreds of thousands of people, most of them good people, who truly wanted to do the right thing, which is to simply meet their financial obligations, but because of some unexpected bad situation that took place in their life, it caused financial distress, which caused them to make bad financial decisions.
I can honestly say to you, that if some of these good people had exercised financial discipline and had taken a serious look at their personal financial position BEFORE they had applied for their particular form of credit, they might have made a very different decision, including the decision to walk away and not accept the terms and conditions of the credit agreement.
Personal Credit is serious business, and your Personal Credit may have a huge impact on your ability to take advantage of future financial opportunities, and this is why we believe that your Personal Credit should be of high priority for your financial well-being.
As you go through our content you will be exposed to financial strategies that may help you prepare to make good financial decisions when it comes to your credit and your money, which may also prepare you for the tremendous financial opportunities reserved ONLY for Good People with Good Credit.
If you have enjoyed what you have seen so far, and you feel that you might benefit from Goodwill Credit, you are encouraged and invited to CONNECT WITH US.