Building Credit Toughness: What Kind of Borrower Are You?
Building credit and staying on top of your finances can come with some challenges, and those challenges are different for everyone. You have your own credit personality, which means that there are strengths and weaknesses in how you approach borrowing. Take this quiz to learn your credit personality and what it means for your finances.
1. It's time for a vacation! How will you pay for your travels?
A. In cash. If you don't have enough money to finance a trip, you'll enjoy a staycation.
B. With points or cash back from your rewards credit cards. You'll also compare vacation loans and apply for one if you find a good deal.
C. With a card that still has credit available — you can work on paying off the balance over time.
D. With whatever method is available when you travel. You won't worry about that until you're at the airport.
2. Your car keeps breaking down and you'd like to buy a new one. What do you do?
A. Plan to take the bus this year. You prefer to save up to cover the cost of a new car all at once.
B. Shop around at a few different dealerships to see which one offers the best financing terms.
C. Buy your dream car, even though you know it's going to be tough to make the payments.
D. Put off thinking about it. You can keep paying for repairs while you decide what kind of car you want.
3. Your credit card balance is more than you expected after you went over budget on a holiday party. What's your next move?
A. Pay off the entire balance immediately, no matter what else you have to cut back on to do it. You'll plan not to spend so much on your next party so that this doesn't happen again.
B. Take advantage of a balance transfer offer from a new credit card. You'll pay off the balance before the introductory APR expires.
C. Make the minimum payment and try to keep that in mind if you need to use your credit card again.
D. Pay less than the minimum. You have a tendency to put off budgeting and find it difficult to know where you stand each month.
4. You're shopping for a TV and the store offers 5 percent off your purchase if you apply for the store's credit card. What do you do?
A. Ignore the offer and pay with your debit card. You don't want a new line of credit.
B. Compare the store card to your current credit cards. You'll choose the option that gives you the best rewards.
C. Apply for the card and add some speakers to your cart.
D. Take the brochure to read later.
Take a look at your results!
Mostly A's: The debt avoider. You're financially savvy and like to avoid borrowing. You're great at staying within your budget, but you may forego opportunities and miss out on rewards if you never use credit. As long as you can afford the payments and use credit responsibly, you may want to consider borrowing for some purchases when paying upfront is inconvenient.
Mostly B's: The optimizer. You shop around and use credit options that give you the most benefits. You already do a good job of selecting the best credit terms and maximizing rewards. You just want to make sure that you maintain a budget and don't borrow simply to grab a deal.
Mostly C's: The spender. You buy the things you want, and you sometimes have trouble paying for them. Your goals should be to set a budget, pay off debt, and reduce your spending to affordable levels. It may help to work toward your goals with a friend or partner who can check on your progress.
Mostly D's: The procrastinator. You postpone making decisions about money and debt, which can sometimes cost you more in the long run. Try to schedule regular times to review your finances and plan your budget. If you'd like help getting started, you might want to consider the HelloWallet budgeting tool.
Now that you know your credit personality type, you'll be better prepared for the challenges you face as you work on building credit.