Credit tips & warning signs

When you use credit wisely, you prove your financial responsibility. If you pay your bills on time, you'll build a good credit history - which will make it easier for you to borrow again in the future. But if you don't pay your bills as your creditors require, you could face credit problems for many years to come.

Build a credit history

  • Establish a steady work record
  • Pay all bills promptly
  • Open a checking account and don't bounce checks
  • Open a savings account and make regular deposits
  • Apply for a local store credit and make regular monthly payments
  • Apply for a small loan using your savings account as collateral
  • Get a co-signer on a loan and pay back the loan as agreed

Avoid credit traps

  • Know your income and expenses
  • Make and use a spending plan
  • Avoid spending more than you earn
  • Make credit payments promptly

Ask before you take on credit

  • What is the total dollar amount?
  • How much is the monthly payment?
  • What is the annual percentage rate?
  • Are there insurance fees?
  • Other fees?
  • What is the total dollar cost of the credit?
  • What will happen if I cannot pay?
  • Can I afford this debt?

If you cannot pay

  • Talk with your creditors
  • Postpone further credit purchases
  • Reduce living expenses
  • Seek help from a non-profit Consumer Credit Counseling Services to develop a realistic budget and debt repayment plan
  • Consider ways to increase income
  • Use bankruptcy only as a last resort

If you're married

If you're married but do not have credit in your own name, write your creditors and request it. Under the Equal Credit Opportunity Act, creditors must report credit history in both names when accounts are shared.

Credit danger signals

If you can answer "no" to the following questions, your credit's in excellent condition! If you answer one or two questions with "yes," your credit behavior is pretty good, but has a little room for improvement. If you answer "yes" to three or more questions, you may be headed for financial problems.

    1. I do not know how much I owe.
    2. I get a new loan to pay off an existing loan.
    3. I would have an immediate financial problem if I lost my job.
    4. My expenses have grown faster than my income.
    5. I regularly dip into my savings to pay regular bills.
    6. I spend more than 20% of my take-home pay on non-mortgage debt.
    7. I pay only the minimum balance on my credit cards.
    8. I keep moving debt from one credit card to another.
    9. I am often notified by bill collectors or threatened with legal action on my debts.

If you're having difficulty making payments to your creditors, try adjusting your spending plan by reducing your expenses or increasing your income. If you just don't see a way to do either, contact your creditor to work out a solution.

You may also want to take advantage of consumer credit counseling services, which can help you work out a repayment plan with creditors and work to improve your financial situation.


Call the Financial Insider Network Customer Service Center toll-free at 1-800-510-7033. HOURS: weekdays 7:00 A.M. - 8:00 P.M. (CST).






  Visit our Legal Resource Center  
  Does your credit need help?  
  Credit Evaluation Worksheet  
  Goal setting:1,2,3  
  Income worksheet  
  Tracking daily expenses  
  Spending plan  
  Credit tips & warning signs  
  Can you afford more debt?  
  About your credit report  
  10 rules of money management  

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