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Credit, Loan and Debt–An Introduction

Credit, Loan and Debt–An Introduction

Photo by Karolina Grabowska from Pexels

Whether you are a business owner or just curious about the topics of credit, loans and debt for personal reasons, you have come to the right place. This can be a tough subject to grasp, mainly because of the fight-or-flight response triggered when the mind feels the body is threatened, but nonetheless, it’s important to focus on this one. 


Credit  is often seen in the form of a credit card, when you’re buying something with the expectations to pay it back later, or a credit score, which is viewed and considered when you are applying for a loan. 

Getting your first credit card can be enticing; it’s like having access to someone else’s money. Many people get carried away with credit cards, thinking they will be able to pay it off later without actually knowing the actuality of the future. Others simply don’t understand how it works and just sign up because their bank suggests it to them, as they do all their customers. And fewer get it, use it to their advantage, and pay it back when it’s needed, or use it to build their credit score.

If you are one of the few who nail it, you are considered “trustworthy” and “responsible” by banks, and get approved higher loans and credit card maxes, because you were able to borrow and pay back the little (in comparison) amounts of money you borrowed via a credit card. If you don’t do it right, your credit score drops and you end up unable to get loans approved, because your credit score implies that you are not able to pay back money. 

Credit is best used when you have the money, or will receive the money from your employer in the future, and want to build your credit score in order to receive a loan.


A loan is a sum of money given to you, up front, by a bank for things like business pursuits, buying a home, buying a car, etc. 

Loans differ from credit, because you are being granted the requested amount of money, rather than racking up a bill without having the money. For example, you wouldn’t buy a house with a credit card. No homeowner, bank, or realtor would, or could, accept that, because it’s money you don’t have in hand. 

You are typically given longer periods to pay off a loan, rather than a credit card, which begins racking interests after the first month of not paying it. Unpaid credit and loans result in debt, which can be a tricky situation to get out of if you weren’t prepared to get into in the first place. You can’t receive a loan to get out of debt, and you will likely find a debt to be an obstacle, like a low credit score, to being granted a loan. 


Debt occurs when you owe someone money, in this case, the bank. If you max out a credit card without having the funds to support it, you are in debt. If you take a loan from a bank, technically, you are in debt to the bank. 

Whether you are using a credit card or taking out a loan, you are always in debt until the balance is paid off. Debts can result in having your assets (car, house, businesses, etc.) taken away, which is why it is so important to not get here in the first place.

Who to turn to when you are in debt?

If you find yourself maxed out on your credit card, dealing with a low credit score, or unable to pay off a loan, consider contacting an expert in Strategic Consulting

These trained consultants help thousands of people each year to recover from debts, receive loans, and improve their credit scores. They know that not all sizes fit one, so they offer many options for all kinds of situations. 

Even if you are not currently in debt or needing one of these services, keep a strategic consultant in the back of your mind. You never know when a friend or family member might need it if you don’t! 

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