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Some common types of consumer credit are installment credit, non-installment credit, revolving credit, and open credit.
Consumer credit falls into two broad categories: Closed-end (installments) Open-end (revolving)
Customer credit is a form of payment that allows small business customers to purchase a product or service before paying for it in full. The process works similarly to the way a credit card does?you procure something and pay it back later.
The application will ask you for personal information to verify who you are and determine whether you can repay what you borrow. In most cases, the lender will also check your credit history to see whether you meet their credit requirements and to determine the interest rate and repayment terms they offer you.
Consumer credit can be a valuable financial tool to help you make purchases to pay off over time so you can maintain cash flow. If you don't use consumer credit responsibly, your credit score could suffer. Understanding how each type of consumer credit works is key to helping you establish good credit history.
Banks and financial institutions, department stores, and many other businesses offer consumer credit.
Using credit also has some disadvantages. Credit almost always costs money. You have to decide if the item is worth the extra expense of interest paid, the rate of interest and possible fees. It can become a habit and encourages overspending.
What is Consumer Credit? A consumer credit system allows consumers to borrow money or incur debt, and to defer repayment of that money over time. Having credit enables consumers to buy goods or assets without having to pay for them in cash at the time of purchase.