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Credit and Debt Management

How credit impacts your life depends on how responsible you are. Credit can be a useful tool but it can also get you into trouble. You need to build credit in order to prove your credit worthiness. Once you accept credit, you enter into a contract to receive something of value now with a promise to pay at some date in the future, with interest. An important thing to remember is that credit extends beyond the purchase of goods. Landlords, loan lenders and some employers will review your credit and payment history. A good payment history demonstrates responsibility, a trait most employers seek. The goal of credit management is to show those who inquire about your credit that you are responsible and able to control your spending.

What is a credit report?

A credit report contains information about your credit, bill repayment history and the status of your credit accounts. This information includes how often you make your payments on time, how much credit you have, how much credit you have available, how much credit you are using and whether a debt or bill collector is collecting on money you owe. Make sure you review your credit report to ensure that the information is accurate. If there are any discrepancies contact the credit reporting agency that provided the report containing the error.

Where to obtain a free credit report?

What is a credit score?

Your credit score is a number generated by a mathematical algorithm using information in your credit report. It is designed to predict risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring. The two biggest factors that determine your credit score are payment history (35 percent) and amount owed (30 percent). Other factors include the length of credit history (15 percent) new credit (10 percent), and types of credit used (10%). Generally, a longer credit history will increase your score. New credit is based on how many new accounts you have established, how long it has been since you opened them and how many requests for credit you have made. The type of credit used is based on the overall mix of credit cards, installment loan, mortgage loans, etc. that you have. The more balanced the mix, the more likely this factor is to improve your score.

How to maintain a good credit score?

  • Pay your bills on time.
  • Keep your credit card balance(s) low or at zero.
  • Manage your debt.
  • Check your credit report regularly.
  • Do not bounce checks.
  • Only apply for credit you need. If you close a credit card account, your credit score may decrease.
  • Contact your lender/creditor if you fall behind on your payments.

Credit Resources 

Ten Warning Signs of Too Much Debt

If you're questioning whether you have too much debt, there's a very good chance you do. Having too much debt can lead to other financial problems like not being able to save money, missing bill payments, and having to borrow more money just to stay afloat. Here are a few signs you have more debt than you can handle.

  1. You've drained your savings trying to pay off your debt.
  2. You only make the minimum payment on your credit cards each month.
  3. You pay bills late because you don't have any money.
  4. You have at least one credit card that is near, at or over the credit limit.
  5. You continue to make more purchases on your credit card(s) while trying to pay it off.
  6. You use cash advances from your credit cards to pay other bills.
  7. You have been denied credit.
  8. You don't know how much total debt you have.
  9. Your finances cause you to lose sleep at night.
  10. You don’t answer the phone because it might be a bill collector.

Debt Management Resources

If you are feeling overwhelmed with debt, try contacting your lender about repayment options, consider consolidation and/or contact the National Foundation for Credit Counseling. For online resources visit: