Tori Foster, Contributing Writer

A lot of people’s most important relationship is with a group of people they have never met, who work for a system that is too hard to understand.

Credit has a significant impact on people’s daily lives.

Annette Moore is a 35-year-old wife and mother of two children. Moore expressed how she struggled with generating good credit while in college because she knew little about the credit system.

She stated, “I applied for multiple credit cards just because [the banks] sent me the application.”

Moore is not the only one facing this issue. Many citizens in the United States are struggling with establishing good credit, too. Credit allows people to borrow money for the different luxuries in life, such as, buying a home or car. People obtain the money they need to buy what they want from banks. Loans are taken out by banks which makes them our lenders. A lender is a person or organization that lends citizens the money they need for a limited amount of time. They put people on payment plans to ensure the money will be paid back.

Routinely, lenders check four major things to see if somebody has good credit: capital, capacity, credit history and colleterial. Capital is the amount of cash a person has readily available in their bank account. Lenders use that information to determine the capacity of a person’s income. Banks want to ensure that borrowers can repay them. Then they predict if the person will pay off the loan by searching up their credit report. Personal information, credit accounts information, credit inquiries and public records are found in credit reports. They also disclose a person’s loans, credit cards and any other debts they might have or had in life. After those three steps, lenders will ask if the person have any collateral, something that can be used as a repayment if needed.

As people begin to pay back their different loans or bills, a three-digit number is assigned to every individual who has a loan in the United States. The three-digit number shows the percentage of the loan that has already been paid back. Just in case people were unaware, they are building their credit score with every payment they make toward the loan or bills. A credit score ranges from 300-850. It tells lenders, car dealerships or real-estate agents you are loan worthy

Moore explained, “By the time I graduated I had good credit, but lots of debt to go along with it.” According to the U.S. Census Bureau as of March 2013, “While the percentage holding credit card debt declined from 51 percent in 2000 to 38 percent in 2011, the percentage holding other unsecured debt, such as educational loans and medical bills not covered by insurance, rose from 11 percent to 19 percent.”

In the long run, Moore learned how to manage her money. She only uses her credit cards when it is an emergency and when she knows she can pay back the amount. Since her payment history is good, her credit allows her to purchase the things she wants. Moore has owned three cars and two houses so far in her life due to the good credit she established after college.

Her advice to college students is, “Only apply for what you can afford. You don’t need cards to every store that you shop at. Have maybe one or two cards and charge small amounts that you’re able to pay for.”

Good and great credit is an issue everyone can tackle by just spending money when necessary.