Balancing your credit and debt is an important building block to good financial health. Credit follows you everywhere you go, affects how much access you have to money, and can even influence employment opportunities.

What is Credit?
Credit is the confidence in a borrower's ability and intention to repay. People use credit to borrow money so they can obtain loans for a home, a car, college education, and other things they may not be able to afford upfront.

How much confidence lenders have in you as a borrower depends on many factors. Your income is an indicator of your ability to repay, particularly when compared to the amount of debt you may already have. Another factor is the amount of borrowing you have already done and how well you repaid. Keeping your debt low and making payments on-time and regularly will help to improve your credit.

The credit a person has typically determines how much they will be allowed to borrow, for what purpose, for how long, and at what interest rates. 

So how do you and lenders know if you have good or bad credit?  Credit reports and credit scores are tools used to evaluate your credit.