What is credit ? How does credit play a vital and positive role ? Explain with an example (2024)

FAQs

How does credit play a vital and positive role? ›

Credit plays a vital and positive role in following ways: (i) Credit helps people in meeting the ongoing expenses of production. (ii) It also helps people to complete tasks in given period of time. (iii) It helps people to earn more profits. (iv) By earning profits, the standard of living of people rises.

Having credit enables consumers to buy goods or assets without having to pay for them in cash at the time of purchase. Having a good credit record means that a person has an established history of paying back 100% of his/her debts on time.

Credit is a relationship between a borrower and a lender. The borrower borrows money from the lendor. The borrower pays back the money at a later date along with interest. Most people still think of credit as an agreement to buy something or get a service with the promise to pay for it later.

The Role of Credit for Development plays a very important role in the growth and development of a country and hence it should be made available at affordable rates. The availability of an easy rate of credit is the first step towards an economically sound nation.

Good credit management leads to higher credit scores, which in turn lowers your cost to borrow. Living within your means, using debt wisely and paying all bills—including credit card minimum payments—on time, every time are smart financial moves.

Credit can be a powerful tool in achieving important financial goals. It allows you to make large purchases (such as a home or a dental practice) that you otherwise would not be able to afford if you were paying in cash.

Credit is the ability of the consumer to acquire goods or services prior to payment with the faith that the payment will be made in the future. In most cases, there is a charge for borrowing, and these come in the form of fees and/or interest.

Good credit can help you borrow money more cheaply, qualify for credit cards, have lower insurance costs and more.

Having access to credit allows you the flexibility to get something now and pay for it later. Credit can help you do things like buy a house or a car, or finance your education, but it's also a major responsibility that's important to understand before you start to take on debt.

What is the impact of credit on our lives? ›

Credit scores play a huge role in your financial life. They help lenders decide whether you're a good risk. Your score can mean approval or denial of a loan. It can also factor into how much you're charged in interest, which can make debt more or less expensive for you.

“Primarily though, it demonstrates that you understand what is meant by intellectual property and copyright and that you have your own ideas too – ones that you would not want someone else to 'steal'.” Simply put, copying or plagiarizing someone else's work is stealing.

You can enjoy using something you need as you pay for it. Get something you can't afford now. If you can't af- ford to pay cash for a car or other large purchase, using credit allows you to get it now. May get better service on something bought on credit.

Credit allows companies access to tools they need to produce the items we buy. A business that couldn't borrow might be unable to buy the machines and raw goods or pay the employees it needs to make products and profit. Credit also makes it possible for consumers to purchase things they need.

Credit can be a powerful tool in achieving important financial goals. It allows you to make large purchases (such as a home or a dental practice) that you otherwise would not be able to afford if you were paying in cash.

Good credit can signify that your financial situation—and the rest of your life—is on the right track. This means your credit score can affect your insurance rates, what apartment you'll be approved for, and perhaps even whether you get that new job.