Attention: Money 101 will no longer be available after May 31, 2021. After that time the Enrich financial literacy tool will be available at moving forward.

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Credit - Head Matters



Balancing the benefits and costs of consumer credit can be difficult but is very important for your financial well being. Throughout the unit we provided examples to show the good and bad things about using credit, and how to analyze and make a decision on which is best for your unique circumstances. Credit is not always bad; and sometimes after a thorough analysis, it could be the best path to purchase something you need. However, before you decide to use or not use credit, you must have a good understanding of: types of lenders, interest types and rates, borrowing fees, short and long term loans, and secured and unsecured loans. Remember that some loans might offer benefits, like grace periods that might help you during repayment.

It is also important to monitor your credit report and be aware of your credit score. In fact, you can get one free credit report from each of the three credit reporting agencies every year to verify that no mistakes or discrepancies have been made. Consumer protection laws can protect you in case of fraud or theft.

Finally, keep in mind, when you take out a loan or use a credit card you have a legal obligation to pay it back.  If you cannot pay it or you decide not to pay it, your credit score will be negatively impacted, which could affect your overall financial well being and will affect your ability to use credit in the future.

The last step to complete the Credit Head Matters section is to test your knowledge with a quiz. Just click "Next" to begin your quiz.


Used with permission. Financial Fitness for Life, copyright © 2001, Council for Economic Education (formerly National Council on Economic Education), New York, NY. All rights reserved. For more information visit or call 1-800-338-1192.

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