It is not difficult to stay away from bankruptcy and from credit problems if you understand certain points and then put those understandings into practice. Let's take a look at some of the understandings. First of all, consumer credit is not free and it is not money. Your creditors expect that you will pay back your debt, plus interest. Even though the government and courts have recently become more sympathetic to the consumer having credit problems, it is still expected that you will pay back your debts.
Secondly, there is a limit to the amount of credit one can handle, based upon one's income. In other words, credit is not unlimited for any person--whether he or she has a high or a low income. One must seriously consider the opportunity cost of gaining too much credit. Not being able to pay back your debt can affect your ability to get credit at a reasonable rate for many years.
A third understanding is that a poor credit rating can affect many areas of your life. With a poor credit rating, you will have trouble getting loans or reasonable interest rates when securing larger loans -- eg., for buying a car or house. As indicated, a poor credit rating could also affect your employment.
What can you do to maintain a good credit rating so you will be able to have access to credit at reasonable rates? The first thing to do is to show that you can handle credit. You do this by applying for a credit card or a charge account at a local store. Then you purchase something on credit. The next step is to make the required payments, promptly. This shows that you are responsible enough to handle the payments.
Some of you may not be able to open a credit account or secure a credit card because you are a minor. You may still want to open the account with one of your parents or adult friends. Then you can practice charging and paying back the debt in a timely manner.
A primary goal of each person is to establish and maintain a good credit rating. A good credit rating means that you are perceived to be a good credit risk--you have experience in assuming debt and paying it off.
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It is not difficult to stay away from bankruptcy and from credit problems if you understand certain points and then put those understandings into practice. Let's take a look at some of the understandings. First of all, consumer credit is not free and it is not money. Your creditors expect that you will pay back your debt, plus interest. Even though the government and courts have recently become more sympathetic to the consumer having credit problems, it is still expected that you will pay back your debts.
Secondly, there is a limit to the amount of credit one can handle, based upon one's income. In other words, credit is not unlimited for any person--whether he or she has a high or a low income. One must seriously consider the opportunity cost of gaining too much credit. Not being able to pay back your debt can affect your ability to get credit at a reasonable rate for many years.
A third understanding is that a poor credit rating can affect many areas of your life. With a poor credit rating, you will have trouble getting loans or reasonable interest rates when securing larger loans -- eg., for buying a car or house. As indicated, a poor credit rating could also affect your employment.
What can you do to maintain a good credit rating so you will be able to have access to credit at reasonable rates? The first thing to do is to show that you can handle credit. You do this by applying for a credit card or a charge account at a local store. Then you purchase something on credit. The next step is to make the required payments, promptly. This shows that you are responsible enough to handle the payments.
Some of you may not be able to open a credit account or secure a credit card because you are a minor. You may still want to open the account with one of your parents or adult friends. Then you can practice charging and paying back the debt in a timely manner.
A primary goal of each person is to establish and maintain a good credit rating. A good credit rating means that you are perceived to be a good credit risk--you have experience in assuming debt and paying it off.