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C H A P T E R 7
THE CREDIT CONUNDRUM
Credit
PRODUCT PREVIEW
Debt
Learning Goals By the end of this chapter you will be able to: • Distinguish between consumer and non-consumer credit. • Explain how credit is a building block of wealth. • Identify the primary tool of consumer credit in the U.S. • Describe the contents and purpose of a credit report. • Summarize the basic elements of the FICO ® score. • (Opt.) Debate the merits of a free college education.
C redit is a contractual agreement wherein a person receives something of value now, in exchange for a promise to pay for the thing later. A conundrum is a difficult and particularly vexing problem. Q. What kind of a conundrum does credit present? OK, the answer to that question is pretty obvious. The ability to borrow money to get what you want, then repay it at a later date is a conundrum: While it’s great to have access to funds to buy what you want when you want it, credit comes with a downside: debt . One cannot enjoy the benefits of credit without the burden of debt. Credit plays a very important role in building wealth and prosperity. As a financially literate person, you should know a bit about the benefits and the challenges of credit!
Chapter Resources: The online resource to explore for this chapter is simpletuition.com . This is an excellent website which enables students and parents to understand the particulars about their type of student loan.
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