Host: What is the connection between credit and debt?
Vikki Frank: Well, there’s a strong connection between credit and debt, but fortunately credit is not debt. On the one hand, credit is an asset. It’s something that we owned. It’s our financial reputation. And it’s something that’s very positive.
Debt, on the other hand is something that we owe. It’s the money that we owe. We can access debt because of our good credit or our bad credit. When we have good credit we can access inexpensive debt. When we have bad credit we own then we have been to pay a lot more and get worst terms to access loans and debt.
The good news is that the way the credit system works. It’s all about your financial behavior, so how you’re paying back things on time, and that you’re managing your debt and you’re keeping your debt low. So having a $100.00 loan a $10,000.00 loan can actually put you in a lot more debt if you have $10,000.00 loan, but they both have the same impact on your credit.
In fact, a $100.00 loan can have a better impact if you’re able to pay that back on time each month.
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