Get Smart about Credit
In the financial world, your credit rating is one way you're "graded." Using a credit card
wisely and paying bills on time are two ways adults earn a good credit score. Having
good credit helps when it's time to rent an apartment, buy a car or even get a job.The Good, the Bad and the Ugly
Taking out a loan or charging something on a credit card means you're taking on debt. Some debt, like a student loan, is considered good debt. High-interest credit card debt, on the other hand, can be ugly.
How do you know when debt is good or bad?
Consider this:
1. Reason for borrowing. It's good to borrow money to invest in your future, like for higher education or eventually a home. It's bad to borrow money for things that lose value quickly, like clothes and video games.
2. Rate of interest. Student loans typically have low interest rates, which is good. Credit cards, however, can charge high interest rates (up to 35% if you make a late payment). That means you can end up throwing away money on interest, which is bad.
3. Ability to pay it back. Paying the full balance on a credit card every month is good. But racking up late fees and even more interest is bad.
Start Out on the Right Foot
If you'd like to learn more about ways to build a healthy credit rating, visit us online or in person.
