When credit grows, consumers can borrow and spend more, and enterprises can borrow and invest more. A rise in consumption and investments creates jobs and leads to a growth of both income and profit. Furthermore, the expansion of credit influences also the price of assets, thereby increasing their net value. When consumers and businesses can borrow money, economic transactions can take place efficiently and the economy can grow. Credit allows companies access to the tools they need to produce the items they buy. A business that couldn’t borrow might be unable to buy the machines and raw goods or pay the employees it needs to make products and profit.

Credit also makes it possible for consumers to purchase things they need. Many items, from cars to houses, are too expensive for most people to pay for all at once. With credit, it’s possible to pay over time while accessing essential products and services when you need them.

When someone’s income rises he can borrow more and spend more as his creditworthiness increases. Creditworthiness is made up of two things – his ability to repay and the real assets that he bought from his rising income. This process continues until the spending at the origin stops. This whole process is cyclical. Hence the short-term credit cycles are formed.

Why do I need Credit?

Although credit has an important role to play in maintaining a functioning economy, you may still be wondering why you need credit as an individual.

Accessing credit is important for another reason in today’s society: consumer credit reporting. When you borrow money, creditors often report your behavior to credit-reporting agencies, including Equifax, Experian, and TransUnion. Data on your financial behavior — such as whether you make loan payments late or fail to pay — is aggregated to create credit reports and evaluated to generate credit scores. Those reports and scores are used by lenders when they assess how risky it may be to lend to you. There is good at money lending in toa payoh Payoh, you can visit for information.


It is really necessary to have credit in the economy.  Getting by without credit can be difficult because it is a credit-based economy. Without the ability to borrow — and without a positive credit history — you may not be able to make big purchases like a home or a college education and benefit from the wealth-building that may result. But credit isn’t the answer to all your financial problems; you need to borrow responsibly and use credit wisely to help, not hurt, your financial future.

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