The sensible use of debt should be part of any sound financial strategy. Debt can enable you to enjoy things that otherwise are beyond your current reach. Borrowing can also have its ugly side. Too much, too expensive or the wrong kinds of debt can make life miserable.
Borrowing costs money. That is not necessarily bad. It just means that when you pay it back, you have to pay more than you borrowed. The components of a good debt strategy are quite simple:
The importance of a good credit record
A good credit record does more than just make future credit approval easier to get. Most lenders use your credit record to determine credit limits and what rates to charge. A good credit record will save you money. A program enables you to get a free credit report once a year so you can know your own credit record. You can request your free report at the website - www.annualcreditreport.com. Otherwise you can order a report from one of the three large credit reporting agencies.
|Order your credit report|
Common sense borrowing habits
Getting help if needed
Take action immediately if your borrowing is getting out of control. If credit cards are the problem, stop using them or even cut them up. Contact lenders to develop a workable repayment plan. A qualified credit counselor can help.
Consider all the terms
Comparing credit cards can be confusing. You have to consider interest rates, fees and associated benefits. The right card for you should reflect how you use it. If you pay the full balance monthly, the interest rate is of little concern. Focus on any annual fee and benefits such as airline miles. If you carry over balances, the interest rate should be a top concern.
The "right mortgage" for you should balance interest rate, length, and down payment requirements that fit your situation. Adjustable rate mortgages usually have lower rates, but your payments may increase. Long-term mortgages usually lock a higher rate. If you expect to stay in one location only a few years, an adjustable rate mortgage may be best. If an increase in monthly payments would be too painful, look at a fixed rate mortgage or an adjustable one with rate adjustment limits.
Prioritize borrowing based on long-term value
Being conservative in your use of borrowing can help you take control of your financial future. Borrowing for the right reasons and living up to your repayment responsibilities can make borrowing a useful financial tool.
This Resource Center is designed to offer helpful news, tips, and tools for general informational purposes ONLY; it is not intended to provide legal and/or financial advice or recommendations for any specific individual, business, or circumstance. The offerings found here are provided by third parties, which are neither controlled nor endorsed by Bank of Oklahoma. Bank of Oklahoma does not guarantee or warrant the accuracy, completeness, or timeliness of this information and content. Additionally, links to third party sites are provided only for your convenience. Third party sites are neither controlled nor endorsed by Bank of Oklahoma and may not have the same privacy, security or accessibility standards. Third Parties are solely responsible for the content and availability of such sites.
© 2015 Bank of Oklahoma, a division of BOKF, NA. Member FDIC. Equal Housing Lender.