Credit cards and creditworthiness....

In my finance class this past week, we talked about how creditors determine your creditworthiness. Some of the things they check include your FICO score, your personal cash flow statements, and your payment history (how much have you borrowed in the past and how timely have your payments been?). These factors are important to a company; if your credit history is less than satisfactory, you could be considered a great credit risk and the company takes the risk of the debt not being satisfied. They also consider things like income and assets, which they can use as collateral to satisfy a debt/loan obligation.

Not to be left out, credit factors can also affect your search for a job. Many employers are now doing credit checks on prospective employees, and they tend to look more favorably on applicants whose debt load is low than on an applicant who has less cash flow and more debt.

The chapter also talked about how we can use credit cards wisely and thus avoid the trap of falling into debt (or deeper into debt); one of the hardest--but best--things we can do for ourselves is to not use a credit card UNLESS we are absolutely sure that we can pay the balance the next time the bill cycle comes around.