Consumers nowadays use credit to buy almost everything, including food, clothing and transportation. However, many people struggle to control their use of credit and get overwhelmed by piles of bills. This oftentimes leads people from running out of cash and asking for temporary help from different credit institution or small time money lending entities.
But what really is credit? How is this affecting today’s millennium compared to the previous generation?
Credit as generally defined means receiving a thing of value now and promising to pay for it at some future time, often with a finance charge or interest added by the lender. In a more technical term, credit also refers to the creditworthiness or credit history of an individual or company. For example, a person may say, “She has great credit so he is never anxious about the bank rejecting his personal loan application.”
There are different types of consumer loans that are becoming popular. These are personal, auto, payday and student loans which are often sourced out from different banks, credit unions and other people that lend money. Though regardless of type, every loan, especially the governing terms and conditions for repayment, is governed by applicable laws to protect consumers from unacceptable practices like excessive interest rates. In addition to this, loan length and default terms should be clearly detailed to avoid confusion between lender and borrower.
So how are today’s millennia affected with the availability and easy access of applying for loan or credit?
With the most recent research, young people are more likely to fund key life milestones with credit than their parents. That is, millennials are becoming more positive to hit their dreams and ambition earlier than their parents’ generation because of financial resources already available via credit or loan application. This kind of action is not a bad thing as long as they manage their credit responsibility. Access to clear financial education is one way of doing this, making sure they know their way out and act smart so they won’t be buried with debt at an early age and live their life the way they want it.