Slide MGT312 Slide04

Building and Maintaining
Good Credit
Chapter 6

Advantages of Credit
• Convenience.
• Emergencies.
• Security.
• Free credit.

Disadvantages of Credit
• Lower financial flexibility.
• Temptation of spending more money.
• Costly interest.
• Financial distress.

Debt Limits
• Debt payments-to-disposable income
method.
• Debt-to-equity method.
• Continuous-debt method.

Credit Approval Process
• Application.
• Credit report.
• Decision.

Building a Credit History
• Establish checking and savings accounts.
• Pay bill using own name.
• Pay bills promptly.
• Apply for credit card.
• Apply for short-term loans.