What is consumer credit

Consumer credit is a basic concept about personal finance, and we deal with it in our daily life.

The definition of Consumer Credit is credit issued to individuals that is not collateralized, which is also unsecured loans. A typical example of consumer credit is credit card. Consumers receive credit card with a credit limit; the usage of credit card is charged with interest rate on a revolving basis. The best way to build strong credit score is to use credit card wisely and pay off card balance for each month. If the balance is not paid off for each billing cycle, then the remaining balance will be rolled over to next cycle and the interest charge will be compounded, adding extra interest charge to the consumer.

There are also other types of consumer credit, for example, car loans, car lease payment, department store credit card, student loans, personal loans, etc. Consumers can choose to either pay installment payment till the loan is paid off or choose to pay off the entire loan balance if they have the ability to do so. In conclusion, building good credit standing is important and the best way to start building your credit earlier and manage it wisely.