July 06, 2009

The Truth about Credit

The typical credit card holder carries seven cards with average balance of $1,642.

Every wife should have credit of her own. With so many women in the workforce, it's even more critical that women obtain and manage their own credit.
"How do creditors figure out your capacity for debit? They use a standard formula called a debt to income ratio. They start out by calculating your total monthly debt or expenses, which includes your rent or mortgage payments, car payments, insurance, credit card payments, and so on." Mc Naugton
The total monthly payments divided by the total monthly gross income equals your debt ratio. Before you apply for credit, speak with the lending institution about its debt to income policies.
Here are a few pieces of good advice and things you need to know when it come to credit:

    • If you cannot handle the temptation to overextend your credit, get rid of all your credit cards.
    • Use the credit you have wisely. Don't spend up to your credit limit.
    • Paying the minimum amount on a bill should be the exception rather than the rule.
    • Every time you don't pay a bill in full, you accrue interest on the balance.l In months to come, you will find yourself writing checks to pay off the interest but the primary amount you owe will never decrease.
    • Always remember that when you use credit, you will pay the lender back with interest, which means that you will pay back not only that amount. You can pay up to 20 percent interest or more on credit card balances these days.


Lady A