Without credit, the global economic system would grind to a stop. Credit allows borrowers to immediately buy things they could not afford now. Most persons would not be able to purchase a house without credit. Most young adults do not have sufficient savings to afford the cost of even the most humble of homes. Yet, credit allows them to purchase a home that they can gradually pay off over time as their earnings increase. Without credit, many individuals would not be able to purchase an automobile. Credit also makes it convenient to make spontaneous purchases without the need to carry large sums of cash or checks.
Businesses rely upon credit to manage their cashflow. Manufacturers borrow money to buy raw materials. Merchants buy goods on credit from manufacturers. Consumers buy goods from merchants on credit. Without credit, the process would slow to a halt.
Credit benefits consumers by allowing them to acquire things they need now even if they do not have the necessary money currently available, but will in the future. It benefits merchants by facilitating and increasing sales to consumers and by improving the merchant's cashflow management. Credit benefits manufacturers and suppliers of raw materials by allowing them to provide an uninterrupted flow of goods and materials for the consumer. Without credit, the processes would slow on every level, causing temporary shortages and, worse, labor problems when workers would have to be laid off or furloughed until money was available to resume the supply process.
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