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Acquiring Credit
Good credit management often leads to more credit. One of the benefits of having good credit is it allows you to receive even more credit. For some, though, having access to too much credit can result in irresponsible use of credit and create a cycle of uncontrolled debt. To be a smart credit manager, before accepting additional credit, make sure you can handle it.
Quick Quiz Do I need more credit?
Before taking on more credit, you might want to ask yourself a few questions:
- Will additional credit really give me more financial flexibility?
- If I access additional credit, will I have enough money to pay for my housing, living expenses, monthly bills ... and still save?
- Can I regularly afford to send in more than the minimum monthly payments on all my credit card bills?
- Have I done a good job of controlling my spending in recent months?
If you answered "No" to any of the questions, you may wish to reconsider before accepting additional credit at this time.
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Before you take on more credit, make sure that you're ...
- Following the 20% Guideline.
Generally, no more than 20% of your monthly, after-tax income should be spent on bills, including credit cards. The rest should go to housing, living expenses, and savings.
- Paying More Than the Minimum.
Can you afford to make more than the minimum payments on all of your credit cards? If so ... you'll pay down your balance faster and pay less in finance charges.
- Controlling Your Spending.
If your monthly spending habits are on the rise, you may want to temporarily stop using credit cards and postpone applying for more credit.
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