Why is there a Need to Obtain Some Form of Credit?
When we talk about credit, we often associate it with words such as “loans” - like “personal loans”, home loans (or home mortgages), auto loans, and other types of loans. 
But most often, we know that we could quickly access some form of credit when we use credit cards to pay for something that we want or need to purchase.
This means that we are actually borrowing money from a credit card issuer, and in most cases, from the banks or other financial institutions.
We pay attention to the concept of borrowing. There are instances when people do not have some available funds in order to buy something. So, without available cash, people resort to some kind of borrowing so that they could fulfill what they need to buy or want to buy at that particular point.
Although, people generally have the option whether to proceed with buying or not, when they do not have enough money. This is personal. But many people decide to proceed with borrowing or obtaining some form of credit.
Getting some form of credit is not actually bad. It is our level of knowledge and behaviour towards ‘using credit’ that could make a difference.
So, we need to educate ourselves about ‘credit’ and ‘how to best use credit’ so that we could grow and manage our financial well-being. Getting some form of credit is not actually bad. It is our level of knowledge and behaviour towards ‘using credit’ that could make a difference.
What is credit and why is it necessary?
Some form of credit transaction occurs when one party providing goods, services (or directly providing money) to another party with the promise to pay back at a later date. We call the person who provided the credit as the creditor. And the other party, who made the promise to pay the owed amount at a later date, as the debtor.
Credit has been instrumental to today’s economic activities. In fact, many people need some form of credit in this day and age more than ever.
Many businesses seek some kind of funding or borrowing in order to initiate and operate their businesses. Even governments and public agencies need some form of borrowing. Many individuals apply for credit when they intend to use credit cards for personal purchases. When it comes to thinking about buying a home, consumers also apply for mortgages from a bank or lender. And in which case, they have to prove their credit worthiness before a bank or lender could decide whether to provide loans or not.
In Canada, people are best advised to learn about their credit scores and how their credit ratings affect their borrowing ability.
It is recommended that Canadians familiarize themselves with credit by using helpful websites that could help them be more educated with credit-related terms, such as credit reports, credit monitoring, and credit scores. The two credit bureaus that Canadians use are: Trans Union of Canada and Equifax Canada. Creditors access these two credit bureaus in order to generate credit reports so that they can look at the borrower’s profile.
When you visit either of the two national credit bureaus, you will have a better understanding about credit and how it could affect your financial position or credit worthiness.
Visiting the credit bureau website, Trans Union of Canada, for example, your first learning journey about credit begins.
The financial website allows you to monitor your credit health by obtaining a credit report.
The report could be your starting point for you to really look at your financial health consciously. It is, after all, a reflection of your financial lifestyle. And therefore, you should be able to take steps toward improving your credit health or how to overcome any credit-related financial challenges you may be experiencing.
This credit report will tell you about important information, including your credit history. Remember, creditors assess your credit profile based on some form of reports that they obtain from the credit bureau. Wouldn’t it be great to know how you are doing credit wise, so that you know when is a good time to apply for bigger loans, such as a mortgage? This helps you to prepare really well whether you are that ready to apply for that kind of loan.
When you go to Trans Union of Canada website, you will see several links to educational information that talks about credit-related topics.
You also have the option to become a member so you could access your credit profile, with an accurate report and credit score. It would also alert you when there are credit report changes happening, such as identity theft issues. There’s also a ‘credit and debt analysis’ feature that helps you toward doing intelligent, wise moves in becoming financially equipped and better borrower. Canadians can explore more by visiting TransUnion of Canada website.
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