Credit risks vs. benefits

All of these people have credit, but some have borrowed more than they can comfortably repay. Click on each person to see what they’re thinking.

When I got my first credit card, it was too easy to spend. I started overdoing it, spending a lot more than I would have spent in cash. Now it’s a real struggle to pay it back. I had to pay a few things late, so now I’m losing money on late fees, too. I didn’t make some loan payments and that really hurt my credit record. I missed out on an apartment and even got turned down for a job because of it! I really messed up my credit. Because my credit rating is low, it’s going to be tougher for me to get loans or credit the next time. If I’m even able to borrow I’ll have to pay a higher interest rate. Having good credit made it easier for me to rent an apartment and to get service from local utility companies when I moved in. Good credit also gives me the option of buying things now (like my sound system and cell phone) and paying the money back over time, rather than having to wait. With good credit, it’s easier for me to buy what I want, when I want it. I have the financial flexibility to make major purchases that take more money than I have on hand. I just bought a great car! Good credit is giving me the chance to act on life opportunities. I’m borrowing now to go to college. I don’t want debt problems, so I follow two guidelines: I never let my credit card debt exceed 20% of my yearly net income. Plus, I keep my credit card debt low enough so that my required payments are no more than 10% of my monthly income.
Borrowing too much money and being unable to pay it back is a huge problem in the United States.
Click the Next button to compare good credit and bad.
What is credit? Credit risks vs. benefits Good credit vs. bad Steps to establish credit The “five Cs” of credit