Credit is something that can either make you or break you. It’s similar in its analogy to fire. If used properly credit can make you life much easier by providing cash when needed and added convenience however if you let it go out of control it can literally be the death of you. In this day and age it is vitally important that you learn how to use, protect and unlock the secrets of credit in order to make the most out of the facility to better your own life.

Lets first take a look at where credit started. It was first invented by merchants who had high value items that needed to be moved in order for normal business and cash flow to operate properly. Some customers who did not have enough money to fully purchase the good would negotiate with the merchant for payment plans. This is where consumer credit starts. The merchant will allow for payment plans but attach conditions and interest to make it worthwhile for the merchant.

Below we will describe the importance of consumer credit in today’s day and age and how it is much more than just a final consumer product but also help any merchant up the payment stream.

Take a builder of homes who can now charge $400,000 for a home and make a small (by comparison) profit of 10% because he can move his houses fast due to the easy financing options available to the general public. He can quickly sell the set of houses that he has built and move on to another project. If the general public did not have financing abilities then it would take him much longer to sell the houses as people would be forced to save up before they were able to purchase the house for cash. This however means that the home builder would not be able to sell the houses so cheaply because his money would be stuck in the project for much longer and he has to make equitable returns in order to survive. He would most probably need to sell the houses for $500-600k just because of the long wait needed to see a return from his investment.

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