No doubt that many people have heard the word credit being mentioned recently usually followed by the word crunch, what surprises me is that there are many people who have no idea what it means.
Here is a brief idea:
-Stricter requirements for obtaining credit especially when it comes to poor credit
-People aren’t able to pay back mortgages and credit that they have taken out
-Houses being repossed and people going bankrupt
Why?
People were able to live far beyond their means
Who is to blame?
There is nobody to blame although the banks will take the fall as they are the ones that really lose out if people don’t pay them back especially if it unsecured debt. In the case where it is secured on a house now that house prices are falling some cases the banks are not able to recover their intial money that they lent out. Although we must remember that a mortgage over a lot of years is mostly interest so the actual amount of money they need to recover isn’t usually the full maount of the money that would be paid as it is being paid earlier although in the big scale of things this doesn’t make much difference.