Credit is the ability to borrow money or purchase goods with the understanding you will pay it back later (Akin, 2019, para 1). The most common mistake people make with credit is taking advantage/abusing the opportunity to purchase luxury and pay it back later (Goldsmith, 2016, p. 478). Credit is important because lenders check your credit when you purchase a home, car, and even sometimes while applying for a job. Your credit is essentially a gauge that companies use to determine how trust worthy you will be to pay them back. As a consumer the FTC enforces laws that protects your rights to obtain, use, and maintain credit, they also require businesses to fairly treat all customers in regards to resolution of disputes (Goldsmith, 2016, p. 480). As a consumer you are also protected by the Fair Credit Reporting Act which grants you the right to receive a copy of your credit report, know the name of anyone who received a copy of your credit report, receive a letter explaining why you may have been denied credit or services by a com and dispute any inaccuracies on your credit report (Goldsmith, 2016, 482).  Bankruptcy is declared when a debtor has no other resolution and is looking for a legal way to resolve his/her debt (Goldsmith, 2016, p. 487). Bankruptcy can be avoided by living within your means and avoiding overextending your credit. The advantage of living a debt free life is being free and not experiencing the stress of being in debt. The disadvantage of living a debt free life is you may not have all of the luxury items you want or it may take more time to acquire them.