Credit is an important financial resource.  it helps us acquire things that we do not have enough money to buy.  Credit is using someone else’s money to purchase something we want to use today but don’t have enough money to pay in full today.

When we use debt, we are committing future income to pay for what we want to use today.  We use someone else’s money to meet our need until we repay it.

When we borrow money we create an obligation to repay the money with future income.  If we don’t pay as agreed, we are not keeping our agreement in a legal contract.  We own our part when we repay as agreed or make restitution for paying balances that are due.

Credit is an important resource that helps us accumulate things we need to keep our life moving forward.  It is an obligation to be repaid not a gift of income.  When we own our part and cooperate with our creditors by paying them back as agreed, we keep our financial life moving forward in good orderly direction.

Here is a list of financial best practices we can put into action to make the best use of credit.

• I have a credit record in my own name.
• I maintain a good credit record so I can obtain credit when I need it.
• I order and review my credit record annually.  ŸAnnualCreditReport.com is a centralized service for consumers to request annual credit reports.  You may request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies:  Equifax, Experian, and TransUnion.  Call toll-free at 1.877.322.8228 or go on-line to https://www.annualcreditreport.com/index.action to request your free credit reports.
• I open bills; sort through them; and respond to creditors in a timely manner.
• I know the total amount of debt I owe.
• I pay bills in full when due.
• If I can’t pay my bills in full when they are due, I pay at least the minimum balance on all bills when they are due.
• I keep consumer debt excluding mortgage/rent to less than 20% of my take-home pay.
• I use consumer debt for items that last a long time.
• I stay within my credit limits.
• If I have high balances with high interest rates, I move the balances to an account with a lower rate.
• If chronically ill, I use a credit card with a disability and life insurance feature. During a disability, the insurance pays the minimum payment; at death, the insurance pays off the balance.
• I set priorities and balance my debt with other living obligations so I am not spending more money than I bring in.
• To opt-out of direct marketing lists, call 1-888-567-8688. The key to stopping unwanted advertising mail being delivered to your home is to get your name off the mailing lists.  
• If overextended, I decide whom to pay first and negotiate a reduced payment plan to reduce debt. Options for reducing debt include:
  • Self-help debt repayment plan – set up your plan and contact creditors to discuss the plan.
    • 1. You can use the Debt Inventory Worksheet to inventory your debt. Once you set up your plan, you can contact debtors to discuss the plan.
    • Debt Inventory Worksheet
    • 2. Powerpay.org is a tool you can use to explore options for setting up a debt repayment plan. https://extension.usu.edu/powerpay/
  • Connect with a National Foundation for Credit Counseling (NFCC)  certified consumer credit counselor in your area: 1.800.388.2227; www.nfcc.org.
  • Debtor’s Anonymous, PO Box, 920888, Needham, MA 02492-0009;  Phone:  800.421.2383; Web: www.debtorsanonymous.org. Debtor’s Anonymous provides support to understand the causes and conditions behind self-destructive behavior with money and to take actions that lead to solvency and personal fulfillment.
  • Gambler’s Anonymous, P.O. Box 17173, Los Angeles, CA 90017. Phone:  626.960.3500; www.gamblersanonymous.org/ga. Gambler’s Anonymous provides a support system to help address a gambling problem.
  • Bankruptcy is a last resort.  
    • Chapter 13 provides for readjusting consumer debt of an individual with regular income.  It allows you to keep property and pay debts over time, usually three to five years, by creating a new payment schedule. 
    • Chapter 7 involves liquidating all property that is not exempt which may include cars, work-related tools, household furnishings and distributing the proceeds from the sale to creditors.