What Is Credit?

Credit is an agreement a consumer makes to receive cash, goods or services now and pay later. Credit often adds fees and interest to the total cost. Consumers must be aware of their rights and responsi bilities when using credit. This fact sheet explains the basics of managing credit. Why Use Credit? Many consumers find it convenient to use credit. Renting a car, making hotel or plane reserva tions and shopping online are difficult without a credit card. Using credit is necessary to develop a credit history. Your credit score is based on a record of your credit management history. A good credit score can help you to qualify for the best rates and terms for credit cards, car loans and home mortgages. Credit can be important in case of an emergency. Credit makes it possible to use an item, like an appli ance or a car, while you are paying for it. Credit allows you to take advan tage of special bargains and sales. Buying on credit may make it easier to return items or get a refund