Use Credit Carefully

When it comes to credit - it’s important to know when to say when. Ask yourself these questions? Do you have the financial capacity to repay the level of debt you are seeking on your credit card or through loans? Do you have enough personal assets, such as real estate, stocks or bonds, to act as collateral for the size of the loan you want? Do you pay your bills on time and are you living within your means? Creditors want to see a history of timely bill paying and know that you live within your means. Have you kept your credit obligations affordable by limiting your total borrowing to less than 20 percent of your after-tax income. You can figure your discretionary spendable income by designing a budget listing your expenses and after-tax income. Before accepting any new credit cards or asking for a credit limit increase, determine if you can afford it.

Source: "Keeping on top of your credit," USAA newsletter, July/Aug 97

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