11 Session round-up
In this session you’ve looked at how you can put yourself into a good position when it comes to taking borrowing decisions and access to credit.
You looked at how you should first weigh up alternatives to financing major acquisitions before making a decision that you need to borrow the money.
If you’re going to access credit – a bank loan, a mortgage or just a credit card account – make sure your credit file is in order. This is to ensure that you not only have access to such products, but that you also have access on the best terms for someone with your financial profile.
Finally ensure that you properly incorporate the future financial flows that arise from borrowing – the debt repayments, including interest – into your budget. This will mean that you avoid the risk of either having to borrow even more money to meet existing debt repayment commitments or failing to meet repayments on your existing debts when they fall due. Both scenarios are potentially disastrous and, at the very least will hit your credit score and your future ability to borrow money.
Managing debts is one of the most important features of personal financial management. So make sure you do this in an informed and proactive way. Don’t wait for problems with debts to start taking over your life. Take control and borrow responsibly!
You should now be able to:
- understand the pros and cons of borrowing money to buy things – relative to other ways of financing a costly purchase
- understand credit rating and the activities of the credit rating agencies
- know how to maintain a good credit rating
- know what you can do it you have problems with debts.
Next week, you will complete the course by looking at two major issues you will need to address as early as possible, ideally when you are in your twenties: how to buy your own property and how to plan for a pension.
You can now go to Session 8.