Before You Use Credit...
Thinking about getting a credit card...well...
The Five C's of Credit
- Character
- Are you the type of person that will repay the loan
- Seek references
- Past credit history
2. Capacity
- Your ability to repay the loan
- Evaluate your ability to cover cost of the loan and other existing debts
3. Capital
- Evaluate your current net worth
4. Collateral
- Used to secure loans
- Item value
5. Credit History
- Do you pay your bills on time
- Any bankruptcy declarations in the past
Pros and Cons
Pros:
- Can get free gas, airline miles, money back, and donations
- Can apply for a home
- Flexibility in spending
- You can carry less cash
Cons:
- Identity theft
- Large organizations
- You can over spend
- Fees if you go over amount limit for card