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Understanding Credit

February 05, 20243 min read

“Do not save what is left after spending, but spend what is left after saving.” - Warren Buffett

"Professional blog header with a sleek design featuring the title 'Understanding Credit: The Key to Financial Empowerment' in bold, prominent lettering, set against a backdrop that symbolizes financial growth and stability."

Understanding Credit: The Key to Financial Empowerment

In today's financial landscape, credit is not just an option, but a fundamental component of economic life. It can be a powerful tool when understood and used wisely. Whether you're looking to buy a house, finance a car, or simply get a rewards-based credit card, your journey will likely begin with understanding credit. In this blog, we will delve into what credit is, its various forms, the importance of credit scores, and how to manage it effectively.

What is Credit?

At its core, credit is the ability to borrow money or access goods or services with the understanding that you'll pay later. Lenders, merchants, and service providers extend credit based on trust that repayment will happen as promised. Credit comes in various forms, including loans, credit cards, and lines of credit.

Types of Credit

  1. Revolving Credit: This type of credit allows you to borrow up to a certain limit and carry a balance from month to month. Credit cards are the most common form of revolving credit.

  2. Installment Credit: This involves borrowing a fixed amount and making regular payments until the debt is paid off. Auto loans and mortgages are examples of installment credit.

  3. Open Credit: Utilities and cell phone bills are often considered open credit because while you have a limit, the balance is due in full each month.

The Importance of Credit Scores

Your credit score is a numerical representation of your creditworthiness. Scores are based on your credit history, including the number of open accounts, total levels of debt, and repayment history, among other factors. This score is crucial as it influences the terms and interest rates that lenders may offer you.

  1. High Credit Score: Indicates to lenders that you're a low-risk borrower, often leading to lower interest rates and better credit terms.

  2. Low Credit Score: Suggests a higher risk for lenders, which might result in higher interest rates or a denial of credit.

Credit scores are calculated by credit bureaus such as Experian, Equifax, and TransUnion, and can vary depending on the scoring model used (like FICO or VantageScore).

Managing Your Credit

Effective credit management is pivotal for financial stability and empowerment. Here are some strategies to manage your credit effectively:

  1. Pay Your Bills on Time: Late payments can have a significant negative impact on your credit score.

  2. Keep Credit Card Balances Low: High balances can affect your credit utilization rate, hence impacting your score.

  3. Avoid Opening Multiple New Accounts at Once: This can lower your average account age, which may negatively impact your credit score.

  4. Regularly Monitor Your Credit Report: This helps you catch errors or fraudulent activity early on. You're entitled to a free report from each of the three credit bureaus every 12 months.

  5. Understand the Terms of Your Credit: Be aware of the interest rates, payment due dates, and penalties for late payments.

In conclusion, credit is a powerful tool that, when used responsibly, can enhance your financial stability and provide opportunities for major life investments. Understanding the types of credit, the importance of your credit score, and how to manage credit effectively can lead to better financial decisions and a more secure future. Remember, a good credit score opens doors, but it's your responsibility to ensure those doors lead to financial success and not hardship.

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Hear What Our Clients Say

Ashley Tagaloa


Positive: Professionalism, Quality, Responsiveness, Value

HIGHLY RECOMMEND! Fred has helped me from no credit to great credit in less than a year! I told him my goal was to build my credit so I can get my very first car. He did exactly what he said he was going to do to help me achieve my goals. Very straightforward with his business, he knows exactly what he's doing in order to help you with your credit/goals. Also, very trustworthy and will go out of his way to help you with your vision. I highly recommend working with Fred, because he will see your vision and make it 10x more better for you! It wasn't easy, but with Fred and after seeing the results, it's definitely worth it. THANKS FRED :) - Ashley Tagaloa

Rose At BelSpa


WOW WOW WOW is how I want to start this review!! Fred went above and beyond for my son. I initially just asked him to have a consultation so he could help me with what I should do next after trying to repair my sons credit so then he could go to the Navy. I was trying to do it all on my own and settle his accounts myself and told him what I was doing. He was patient, listened to me and I learned there was so much more that I could have been doing which I wasn't educated or knew of. I learned that there was so much I needed to do, dispute letters if addresses or names weren't matching I needed to accomplish, and I needed to have 3 reports side by side so I can analyze them. Fred has a program and technique on helping people with their finances with seeing what the problem is in your finances and cleaning up their credit is just one of their services you get as a bonus! He was such a blessing and advised us what to do and was able to get reports immediately and draft up reports to send to the credit companies!! I was truly amazed at his speed, response and his professionalism and passion to help my son. He got a plan in place, letters and very responsive. If anyone is looking to repair their credit THIS IS THE GUY TO CALL!!! He truly is a blessing to our family and I know he will be to yours as well!!

Alejandra Avalos


Positive: Professionalism,
Quality, Responsiveness, Value

Wanted to give them a 5-star review for their prompt and professional work. The first week I signed up with Approve my score i instantly seen an increase ( 30-40 point) change on my credit report. They stay on top of everything paper work, follow up with clients make were also on top of our stuff. Freddie and his team have been nothing but helpful to my credit score and happiness to say the least.

If your in need of credit repair....WHAT ARE YOU WAITING FOR CALL THEM!

Kesha Walker

Positive: Quality

I am very pleased with how professional and helpful this company has been to me on my credit journey. I was so lost trying to get help with my credit and when I reached out to Fred he walked me through the process and was very thorough in explaining and guiding me through what needed to happen. I definitely recommend this company for anyone trying to rebuild their credit you won't be disappointed.

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