Credit Based On Trust

Credit is based on trust. People lend other people money with the expectation that it will be paid back – in full. That trust is broken through unpaid debts or late payments.

People with a bad credit report have a hard time finding willing lenders. They often cannot rent an apartment and can lose out on a job because of their bad credit.

Debt relief through debt settlement or debt consolidation can help people get that trust back with lenders. Credit problems, throughout history, have disastrous effects for the individual, but American consumers as well.

Credit Comes In Many Forms

The concept of credit has been around for centuries. But just think back to the Great Depression. Grocers would allow down-on-their-luck families to take a loaf of bread or a bottle of milk with a promise to pay for it later.

Ironically, the Great Depression – which essentially caused the collapse of the American economy in 1929 – originated, in part, because of a lot of stock was purchased with credit that could not be repaid. Figments of the consumption culture that permeates modern society had its origins in the Great Depression. Before the market crash, people bought goods – such as cars - on installment credit.

History Repeated?

Unfortunately, American consumers haven’t learned the lesson of those dark days of the Great Depression. Outstanding credit card debt among Americans totals more than $750 billion.

A shadow of the Great Depression is seen in the current mortgage industry. A hot housing market created a demand for subprime loans, which is for people with poor credit who can’t typically attain financing for a home. Many subprime mortgage recepients have fallen behind on payments or defaulted on the loans. Mortgage loan defaults and their effects have rippled through the economy.

• Several mortgage lenders have gone bankrupt or have cut back operations and employees in the past year
• Banks and other financial companies have tightened requirements for loans – blocking some credit risks from a mortgage
• Home foreclosures have increased dramatically, destabilizing neighborhoods
• Homebuilders are cutting back, leaving many construction workers, subcontractors and suppliers out of work.

You can buck the trend of credit problems with a little education. Paying your debts is the main way to improve your credit rating. Bad credit doesn’t have to take over your life.

Debt consolidation can help by combining several debts into one loan paid off monthly. Instead of keeping track of several bills, you pay one each month. Debt settlement is a different form of debt relief where you pay off debts at a reduced amount.

A debt settlement expert works with your creditors so they will accept a reduced amount to eliminate credit card debt. Unlike debt consolidation, debt settlement can save you thousands of dollars while getting you out credit card debt.

Author bio: Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Learn more about Credit Solutions. Credit Solutions is your alternative to debt consolidation.