Making the right decision
Are you torn between whether or not you should borrow? Credit might sound like the solution to your situation, but if you don’t understand credit and make use of it in the incorrect fashion the solution might soon become your problem.
Bad uses of credit
- Using credit for any reason when you know you cannot afford the monthly re-payment
- Using one credit account to pay another credit account (unless it is a consolidation loan)
- Being in the habit of using credit to make ends meet or buy everyday items (For example, buying groceries and paying for it over a long period of time)
Debt is not necessarily your enemy, but your credit habits are. When making the decision to take on credit you need to use it wisely and responsibly. You need to make the commitment to pay your account regularly and on time as per the agreement that you have signed. If you commit to credit before you are prepared it can lead to you becoming over indebted and resulting in you having a bad credit record.
Use this checklist as a tool to help you make a responsible decision to take up credit.
- Did I draw up a personal budget to ensure that I really can afford this credit before applying?
- Have I checked my own personal credit report before applying to ensure that it is healthy and will not delay my application?
- Do I have all the documents required to support my application?
- Do I have my latest 3 months' payslips and/or bank statements?
- Is my employment or income stable enough that I feel comfortable to take up this credit for the required duration?
- Have I given an accurate account of my expenses and have I been transparent in my application?
- Have I answered all questions fully and truthfully in my application, to the best of my knowledge?
- Did I include all my credit agreements, so that the credit provider has a real picture of my current debt obligations?
- If I am making a joint application, have I included my spouse’s income, expenses and debt obligations in my application?
- Have I considered different reputable and registered credit providers to make sure I get competitive quotes?
- Do I understand what the cost of credit will be for the credit I need?
Ticked most of these? Then you are good to go. Remember – spend wisely!