The basic idea of credit is simple: you borrow money, pay interest to the creditor and ultimately repay the loan in good faith.

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Essentially, the Creditor borrowed against his home and retirement savings to loan money to the Debtor, a (then) close friend, for an investment.

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This "score" is determined by one of three companies--Equifax, TransUnion or Experian--and basically tells a creditor how likely you are to pay back a loan on time.

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