Credit, Credit Scores and Credit Reports
Which comes first, your credit or your first credit card? That’s not much easier to answer than, “Which came first the chicken or the egg?”
The reality is that your credit comes after your first credit card or loan. No loans, no credit cards means no credit.
There’s credit—an advance to buy something—and then there’s your credit—aka your credit file.
Credit is essentially a loan from a bank or other financial institution, including a credit card issuer. These entities are collectively known as creditors or lenders and extend credit to you in the form of:
- Installment loans —aka installment credit—such as a mortgage or car loan
- Lines of credit or credit cardswith a maximum usable credit limit—known as revolving credit
- Credit arrangements are utilities, memberships (think gym) and service agreements (think cellphone)
- Charge cards that are like credit cards, but have to