In simple terms, Credit refers to money that is lent to a borrower on the basis that they will repay it later, often with interest.

More broadly, Credit is the provision of resources (such as granting a loan) by one party to a second party, who is expected to repay the borrowed amount at a later date, thereby creating a debt. The first party is called a creditor (also known as a lender), while the second party is called a debtor (also known as a borrower).

There are numerous types of Credit out there and they’re not just limited to finance — if you get a product on a ‘buy now, pay later’ scheme, this often counts as a form of Credit.

Will I be accepted for Credit?

Each lender will have different criteria for their products, so it’s impossible to say for certain whether or not any applications you make will be accepted. You should always check your Credit Report before you apply — this way, you’ll see the exact information a prospective lender will see when assessing your application.

If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 a month afterwards, which you can cancel at any time online. You’ll get access to the UK’s most detailed Credit Report, with complete information from Equifax, Experian and TransUnion in the same format.

Why is Credit important?

Credit allows people to purchase things right away that they otherwise wouldn’t be able to. Credit is especially useful in financial emergencies or with large, important purchases like houses. A mortgage lets borrowers buy their home without having to pay the full price of the house upfront. Instead, the borrower repays a smaller, more manageable amount each month, meaning they can move in and live in their home while they are still paying for it.

When most people think of Credit, they might think of credit cards, mortgages or car finance but more recently buying a phone on contract has become a popular form of Credit.

Can you get Credit without a credit card?

Yes. A credit card is not needed to take out other forms of Credit, though using a credit card responsibly can make you more appealing to other lenders.