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CONTROLLING YOUR CREDIT
By keeping your credit purchases under control, you can use credit to it's advantage and enjoyment.
You should never allow more than 10% of your net income to credit purchases, not including mortgage payments. If you find you are using more than 15%, you need to cut back. If you use more than 20%, you could get into serious financial problems.
Use the worksheet supplied in Appendix 1 to help you evaluate your current credit position and assist you in avoiding any overextension. Complete a worksheet each month and examine any increases.
Do not assume more credit than you need.
You should always leave some available credit for emergencies. If you have credit that you do not use, get rid of it. Unused credit may also count against you when you apply for credit. And just because you get a raise on your job, don't automatically apply for higher limits. You will find that between inflation and taxes you will seldom have much left over for any immediate increased spending.
To many credit cards can also hurt. It is not a good idea to carry more than three cards.
The more you have the more likely you are to use them and overspend. Some revolving credit cards may carry lower interest rates on amounts over $500. You can find that by keeping $1000 on one credit card, can be more economical than having balances of $500 each on two credit cards.
It is also not advised to charge any items under $25. You will find that much of your debts will stem from small purchases that you would have never made if you had to pay cash.
When applying
for a loan figure out how much it will take to repay the debt with interest.
Shop around as you would for anything and determine how much interest you will pay during the term of the loan. You should never decide right on the spot. After shopping around, do your figuring at home, and decide there. By being concerned about your credit and debts, you can make credit work for you instead of against you.
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