Credit Score vs Street Credit


What is Credit?

Credit - is borrowed money from a grantor. You enter an agreement with the grantor to pay back the amount you spent in a specified time period.

You get positive remarks when you adhere to the payments terms within your agreement. Vice versa, negative remarks will be notated if you do not comply with your agreement terms.

Why do we need Credit?

Speaking for America, I do not know how credit is utilized in other countries. For majority of Americans the only way to purchase big ticket items (house, cars, college education etc...) is by way of a loan.

So it has become a form of business, big institutions shell out capital to people to make purchases, there are companies who monitor your payment history and report that information back to these big institutions to determine your financial risk.

Meaning, these big companies who loan you money want to know that if they give you capital what is the likelihood that you will pay them back is.


4 Types of Credit:

Yeah when I tell people this they don’t even realize that credit is categorize into 4 different buckets


1. Revolving Credit – you have a maximum credit limit – you cannot exceed that limit. Each month you can carry over a balance until the balance is satisfied.

Most credit cards are forms of revolving credit.


2. Charge Cards – you have a maximum credit limit – the total balance must be paid in full every month.


3. Service Credit – Anybody who provides you any type of service (cell phone service, gym membership service, gas or electric bill service) is an example of a service credit – these bills are usually paid monthly.

Please note * not all services credit payments are reflected on your credit report.


4. Installment Credit – If you have ever taken a loan out to purchase a car, house, or school tuition you have been put on a payment plan to satisfy your bill. Every month or whatever the contract terms states, you make a smaller payment to that loan institution which slowly chips away at the total amount owed.




What is good Credit?

Credit scores range from 300 – 850 below is the break down.

300 – 579 = Terrible

580 – 669 = Ok

670 – 739 = Good

740 – 799 = Great

800 – 850 = A1 Credit Score


Hope this was helpful, stay tuned of more post where we show you how to repair and build your credit.




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