“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
It’s a central part of all financial models of the modern world, it’s the focus of our business, and if you have found your way here, it’s likely of interest to you as well. We’re talking about ‘credit,’ and while it’s not ‘the enemy’ it is what we are trying to master here on Credit Rent Boost.
What is Credit
Believe it or not, ‘credit’ comes from the Latin word credit and means ‘(they) believe.’ Okay, bear with us, that may have been wicked convoluted but essentially credit means what it always has despite the change in language. Credit is the intangible trust that one group gives another to give money (or other resources) when the second party will not be paying it back immediately. So, when Frank gives Joe credit, it’s his belief that Joe will repay him. Joe is now indebted to Frank to repay him.
Now, there are a few different types of credit out there. There is trade credit, consumer credit, investment credit, public credit, international credit – the list goes on. All of these, in the abstract, function the same way: one parties trust in another to do right by them.
The one we most often talk about here at CRB is covered by consumer credit. Credit cards, store cards, personal loans, payday loans, mortgages, vehicle financing are all forms of consumer credit. As commerce grew from bartering cultures into what we have today with individuals doing business with huge corporations, the creditor ‘trust’ of a person is hard to measure. That’s why the credit score exists.
The credit score is a numerical representation of that ‘trustworthiness’ of the person. It means all of these other businesses trust you, so this credit company or what have should too. It also takes into account other financial details that show how much trust, or credit, a company should give you to honor your debts. These credit scores are based on credit reports managed by credit bureaus.
The process spirals out into many different branches from there but to put it as plainly as possible, all the various creditors a person may do business with report on their trustworthiness to the consumer reporting agencies who compile this into your score.
We used ‘trust’ and ‘credit’ interchangeably throughout this piece so far and that’s for a specific purpose. While a credit score reflects this ‘financial trust’ a creditor can put in you, not many people think of it like that sort of character evaluation. For some, the credit card company they are using and have failed to pay back (for whatever reason) doesn’t occur to them as a relationship that’s being strained. Instead, they think its some uber-mega-business that is doing the wrong. While there is certainly predatory lending practices out there and payday loan companies who are fine with folks failing to repay in a timely manner, that is hardly the norm.
Perhaps then, the first thing those seeking to repair their ‘credit’ scores should do is start by reassessing their mindset. A credit score is a financial assessment of your trustworthiness. Chew on that for a moment and realize that if you want to improve your credit score, if you want people to be able to give you the ‘credit’ you believe you deserve, you need to act in ways that show it. That means paying down debts, making commitments and sticking to them
Not everyone needs this shift in worldview when it comes to approaching credit rebuilding but it might benefit some who need to take it to heart that, perhaps, up until now, for whatever reason, they haven’t done their best job keeping their financial word. It’s time to take a stand and change that!
With your mind refocused, the ‘enemy’ better understood, you can be like Sun Tzu and go forward, no fear in the result of upcoming battles. To help, Credit Rent Boost can give you that support with a positive history of rental payments as a trade line added to your credit report. If you are renting a home and have been successfully making on-time payments for up to 2 years, you deserve that trust it should net you. You deserve that credit.