Credit, finance, borrowing money. Whatever you want to call it, having money or goods up front and being able to pay it back in affordable installments can seem like the ideal situation. Instead of spending ages saving you can spread the cost, what could go wrong, right? Well, of course, lots can go wrong. It’s easy to become overcommitted or get into a habit of spending money you don’t have, and before you know it your monthly repayments are higher than what you can realistically afford to pay back. The problem with debt is it can spiral, and if you’re not careful, you can find yourself in a right old pickle. However, that’s not to say that debt should always be avoided. Providing you follow the tips below and use good common sense, there are ways you can borrow money without getting yourself in trouble financially. In fact, done properly lending will have a positive impact on your credit score since it shows you can pay back money on time each month.

Know What You Can Afford To Repay

This doesn’t mean guessing or hoping for the best. Work out your incomings and outgoings for the month and find out exactly what you can pay back. Don’t allow repayments to take up every spare penny you have, or if you get an unexpected expense, you’re going to end up in a bit of a muddle. Budget carefully and you stay in control of your money. 

Only Borrow For Worthwhile Purchases

Getting a mortgage on a house, getting finance or looking at unsecured loans to buy a car or lending student loan money, for example, are useful on credit. They’re expensive purchases that you wouldn’t necessarily have the funds to be able just to buy outright. For less important purchases, consider saving up money and buying outright instead. Do you really need a load of new clothes from the catalogue or is this just a luxury? Do you really need those new homeware items or could you spend a few weeks saving for them instead? Once you start making unnecessary purchases and buying things just because you want them now is when things start getting out of control. Sometimes there can be a fine line so just use common sense. For example, taking out a loan so you can make home improvements is a useful thing to borrow for. But if you simply want to go on a shopping spree in your favourite shop then that's a little different.

Don’t Open Further Credit

Often when people find themselves getting into trouble with debt, it becomes tempting to open further lines of credit to pay them off. A consolidation loan is a good way to go since it means you can pay off multiple credit lines and only pay one rate of interest. However taking out further credit cards to pay bills or having the attitude ‘I'm already in debt now so who cares’ is a dangerous game. If you find yourself on a slippery slope financially, your best bet is to seek debt advice as soon as possible. It will help you get back on track and pay things down more quickly without further debt mounting up