Using Credit Wisely

And Its Impact On Credit Score

How to Use Credit Wisely

The first step on a life long journey of using credit in a wise mannor begins with the memorization of the 4 C's of credit. These include:


  • Collateral- An item of value taken by the lender as security to insure that the borrower pays back credit in full.

  • Capital- Any type of money that can be used to pay back debts. Some banks accept expensive items to compensate for the lack of cash.

  • Capacity- when the bank takes into consideration the occupation and paycheck of a creditor to decide who to loan money to.
  • Character- The representitive will evaluate your peronality and check your credit history

It is also important to keep receipts, record you money spent, compare figures monthly, and pay bills in full monthly.

Your Credit Score

Your credit score is used by loaners to determine your elegibilty to recieve a loan. It is made up of points that are based on your debt, late payments, number of open accounts, employment, income, etc. 850 is perfect, while 300 is the exact oppisite. Following the tips above will insure that your credit score is sufficient enough to recieve loans.

Work cited

"Teenagers and Credit: Everything You Need to Know."Teenagers and Credit: Everything You Need to Know. N.p., n.d. Web. 15 Dec. 2014.