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What is debt? What is credit?  Let’s keep it simple. credit is how much you can borrow.

Debt is the payback ratio.  basically there are two kinds of debt; managed and unmanaged.

Managed debt is good for building credit; it is the consistency of paying over time that lenders look for. Word of caution keep your debt paid down to a third of your total limit…ie. your total limit is $300 your limit is $100. I Hear you. but  remember this is  the formula by which you are  judged, and your creditworthiness is increasing, and that is a good thing. Find your total debt limit  on your card and divide by 3…Walla!  This should be your personal limit. Life happens… and when it does we may have to cut some other things i.e. movies, eating out…you get the point.

What if  I’ve been turned down for credit?  Go to a financial institution and inquire about a secure credit card or line of credit. You give them the money, and so they have no risk. Pay  on time keeping the third rule enforced and after 3-6mos you can ask for an increased line of credit.

 Disclaimer: please consult your financial adviser on how to construct your debt.This is not to be considered as financial advice.

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