Credit: Benefits & Drawbacks


Bankruptcy: The inability to pay debts.

Credit Rating: An estimate of the ability of a person to fulfill their financial commitments, based on previous dealings.

How Credit Works

Credit shows that you have fulfilled your promise to pay back borrowed money. Credit can also become very dangerous, many people have gotten in over their heads because they bought more than they could afford, which can eventually lead to bankruptcy. A bankruptcy judgement remains on your credit rating from seven to ten years, making it almost impossible for you to get a loan or to receive credit during that time.

Budgeting Skills

Make sure you can afford a monthly loan or credit payment, to not burden yourself in debt. Before you close the deal you need to make sure you can afford the credit card purchase. Also there is a need to be able to understand APR, how long you will make payments, late fees & extra fees.

Tips for Students

Students over the age of 18 can be eligible to get a credit card without having their parents to cosign. Many advisers recommend students should hold a credit card on which they can carry only a small balance. Another important rule that students should follow is not to charge purchases like food and gas which you could pay for in cash.