4.1.3 Pros and cons of using credit

Borrowing money is neither good nor bad. Credit is a tool. As with all tools, whether it is positive or negative depends on how well you handle it.

Pros

• You don't have to wait to save up the money to buy or do what you want. You can achieve your goals sooner.
• You can build a positive credit history by using debt responsibly. This can make it easier to borrow in the future, perhaps for bigger and more costly goals.
• It allows you to pay for unexpected expenses, such as car repairs.

Cons

• You have to budget for regular repayments.
• Interest adds to the cost of the debt.
• Having to repay a loan limits the amount of money you have available, now and in the future, for other goals or needs.
• If you don't repay loans it will result in a bad credit history, making it more difficult to borrow in the future.