We know credit is important, but what is it really?
By: Darrell Castle
Hello, this is Darrell Castle. I’m an attorney licensed to practice law in the state of Tennessee and this is the first in a series of videos I’m planning to do about credit, and today in this first video, I’m just talking basically about what credit is.
And of course credit is the ability to use someone’s money to buy something right now that you don’t have the money to completely pay for, or you don’t want to use your own money to completely pay for it. That is true if you’re getting a mortgage on a house, or buying a car or using a credit card; you’re using someone else’s money who hopes to profit from the interest that you pay when you repay that loan.
So that money that you get from that credit is, in effect, a pledge against the money you get from your future income. Now, in the case of a mortgage, obviously it is to pay the mortgage on a house and when you don’t repay the debt, the creditor can take the house. He can also repossess the car. For a credit card, he has to use other means to collect the debt, but in effect, he has a security interest in your future income, pledging your labor in the future to repay that debt.
So, put that way, you could say that credit is a mortgage against your future wages. The days, hours, minutes that make up your life is what credit is. That is what it represents to you. How many hours do you have to work to pay for that shirt you bought at Macy’s or Dilliard’s or some other store. How many hours, days and weeks of your life do you have to work to pay for that car? That is what credit really is and it’s how we should think.
If you’re in debt you just can’t pay back, please don’t hesitate to contact our experienced Memphis bankruptcy attorneys. You can speak to one, free of charge, by calling (901) 327-2100 or by filling out one of our online contact forms.