Debt can be tricky, even those who are usually smart and thoughtful can fall prey to borrowing too much, becoming over-committed, and ruining their credit score. Whether it’s due to unfortunate circumstances or simply not thinking things through properly, debt can sneak up on you and once it’s got you in its grip it can be very hard to get out of. To avoid getting yourself into this mess, before borrowing you should ask yourself the following questions.

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Do I Need Credit?

First and foremost, why are you taking out credit? If it’s because you can’t be bothered to save or want instant access to cash for luxuries, think twice. If you can save up and buy things upfront you will save yourself money in the long run. Credit shouldn’t be used to buy things you can’t afford, since this is a quick way to end up in a pickle. Sometimes borrowing can be positive though, perhaps you want to borrow money to buy a house, a car which will open you up to better job opportunities, or maybe you need money instantly for dental or medical reasons. Make sure you can justify taking out the money, and consider saving instead if you can.

What’s My Credit Score?

Knowing your credit score puts you in the best position when it comes to borrowing money. There are places you can check your report for free, so find out what you currently have stored on your file. If your credit score is poor with previously missed payments and CCJs if you need to borrow the money you will need to consider an unsecured loan by a company specializing in poor credit lending. That way you’re not applying for lots of credit and being rejected since many searches and applications on your file will bring your score down even further. If your credit score is good, you know that you can apply with confidence with the main high street banks and lenders.

Am I Getting The Best Deal?

Once you know what kind of companies you’re likely to get accepted with based on your credit score, make sure you shop around for deals. Different rates mean the amount you pay back will vary significantly. Use a price comparison site to check, and if the company offers a ‘soft search’ to see if you’re likely to get accepted then go for it. These soft searches don’t show to lenders and won’t bring down your credit score. Look carefully at the interest rates, what your monthly payments will be (and whether you can afford them) and how much you will pay back overall.

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