Step 3 (How much credit can you afford?)

The focus in this lesson is on the pros and cons of using various types of consumer credit, wise credit management, and the importance of your credit history. Some checklists will help you determine if you have some credit problems, and worksheets help you compare some credit alternatives.

Consumer credit is a way of using future income to buy the goods and services you want today. Consumer credit can be obtained from a variety of sources including banks, credit unions, finance companies, many retailers, and service providers such as utility companies and physicians. In addition, some investors may be able to tap their investment accounts or retirement accounts. Policyholders who have a cash-value life insurance policy can obtain loans based on the cash value built up in the policy. Pawnshops, check cashers, and rapid-refund services are some of the "alternative lenders" that extend credit.

When used wisely, credit can be a valuable financial tool. It is often more convenient to use and easier to carry than cash. Credit also offers some valuable consumer protections. However, when used carelessly, credit can cause serious financial problems. You could owe more than you can repay and damage your credit rating.

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Types of Credit
Do You Want to Use Credit?
Credit History
How Do You Establish Credit?
Choosing a Credit Card
Can I Afford to Use More Credit?
Recognizing and Dealing with
Credit Problems
Avoid Credit Card Blues
All Plastic Is Not Credit
Purchasing Options
Be Credit Wise
Action Steps for Lesson 4
For More Information on
Consumer Credit