[P]eople have different views on credit and they handle it in various ways. It can be helpful to determine what your credit personality is so you can do a better job of managing it and avoiding temptation, which can get you in trouble. See if you identify with one of these people.
You like to shop; it’s a hobby for you and not just another task. You may be a bargain shopper, but you can justify purchases because of the money you save instead of what you’re spending. You can also justify why you buy something as “just in case.” You may have a closet full of clothes you’ve never worn or a large collection of CDs or DVDs.
The problem – Spenders rack up debt in a hurry with the idea of paying it off on payday. However, they see something else they like on payday and use that money to add to their purchases.
You like getting credit cards for the rewards they provide. You have one card that gives you points on the gas you buy, another one on groceries, while a third card gives you airline miles for every dollar you spend. Every time you get an offer for a new card in the mail with rewards, you just can’t help but apply. You also apply for store cards, which save you money on every purchase.
The problem – You have so many cards that you can’t keep track of due dates or the minimum amount to pay. You also tend to rack up debt so that you can gain more rewards, forgetting that the interest you pay offsets any benefits.
The Credit Avoider
You sit at the other end of the spectrum. You avoid credit like the plague. You may have had debt in the past and don’t want to go there again, or your parents may have instilled a cash-only policy in you. Either way, your motto is Cash Only, No Credit. You don’t own a credit card and you drive an old vehicle rather than getting a car loan.
The problem – If the time comes that you need credit or a loan, you won’t have a credit history to get approved. Even getting an apartment or renting a vehicle may be difficult without a credit rating.
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