Describe How To Use Credit Wisely Research Paper

Decent Essays

1. Describe how to use credit wisely.

Credit is established when an individual borrows money from a “creditor” and then promises/works to repay them. To use credit wisely individuals can create a realistic/practical budget, be careful not to have too many credit cards and loans, try to pay off their credit card balance every month, make sure to keep track of what is owed, contact their lending institution if they are struggling to make payments, and remember to not take out a loan you cannot repay. Out of these, I think that remembering to track what is owed, budgeting, and making sure to never spend/loan more than you have are the most important. No matter what an individual does, without these three things, they are not using credit wisely. …show more content…

With this, I can spend money that I have placed into my account and I am responsible for making sure that I don’t spend more than I have. I practice using credit wisely every time I make a purchase while making sure that it is something I can afford. For example, I wanted to drive down to the Lake of the Ozarks, which is roughly 180 miles from my house so that I could spend time with my dad while he was there for a conference. I knew that in order to make this trip, I needed to make sure that I had enough money to pay for gas, which was going to be around $60 round trip with some traveling there. When I went to check my balance, I saw that I already had $120 available, which meant that I could afford the trip down there and …show more content…

As I stated in number one, without these three things, no mater what, you will not have good credit. Creating a realistic budget is going to outline how much you can spend on things such as groceries, car related expenses, house payments, and having fun. Without this, it is almost 100% certain that an individual will go into debt. Remembering to track how much is owed is also important since without doing this, it would be easy for debt to become so overwhelming that you could not pay it back causing financial trouble/ruin. Lastly, making sure that you never spend/loan more than you can afford is important as it prevents going into debt, bad credit, and ultimately it helps to keep you financially

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