Debt and Credit

Are you new with loans and wants to know more about how things work? First of all, you have to know what is debt and credit so you will understand more the further details of loans and other types of debts.

What is Debt and Credit?

A “debt” is money that is being borrowed by one party such as those corporations and individuals from a bank or licensed moneylender. The credit on the other hand is the lawful agreement where the borrower receives or purchases something of value today and agreed to make repayments later, usually with an additional charge which is the interest.

In short, if you are going to use your credit card or applying for a loan from legal money lenders, you are making a debt. So debt is the result of your ability to borrow something of value will be taken from your credit. After knowing the difference between the two terms, you now can understand more about the pros and cons of using credit and the 3 C’s of worthiness as well. Check out the money lender reviews before getting a loan.

All of this information and details were according to Credit Bureau Singapore. The Credit Bureau Singapore was made inlined with the vision of the Monetary Authority of Singapore which is to strengthen the public’s risk management abilities.

Pros and Cons of Using Credit

In everything that we do, there are definitely its own pros and cons and that includes using a credit or credit card which are the following:


  • Don’t have to bring cash
  • Buying what you need immediately
  • Purchases will be automatically recorded
  • More convenient compared to cheques


  • Higher interest rates in some items
  • Charges additional fees
  • Can elicit to financial difficulties
  • Impulse of purchasing more may occur

3 C’s of Worthiness

Not everyone who wants to apply for credit can get an approval from a credit card company that is why you have to check this 3 C’s of worthiness and assess yourself whether you are eligible for a credit or credit card.

  1. Character

In character, this is where you are going to check whether you are the person who will surely repay your debts. Do you pay your bills on time or do you have a good credit score? You may also include whether you can give the bank or credit card companies a few character reference and the details of your current occupation.

2.            Capacity

Your capacity to repay your debts is very important as well. You can assess yourself with this by checking your monthly income. Is it enough to pay all your expenses including your debts? How many loans and other debts do you have as of the moment and what is the total worth of those debts? Can you still cope with the repayments if you are going to apply for another credit?

3.            Capital

In capital, what you are going to check is whether you have a backup in case you cannot repay your debts. Examples of backups are your savings account and properties or investments that you can use as collateral.