A free online toolkit explaining how spending, saving, borrowing, and planning create your financial health. 

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The third pillar of financial health is to borrow. Building good credit is an essential part of becoming financially fit, and borrowing is a great way to do it while setting yourself up for success in the future. Borrowing adds flexibility to your budget and can help make it easier to pay for expensive items over a period of time. In addition, having good credit from smart borrowing can help achieve your goals at the lowest possible cost. Here are a few steps you can take to get started:

  1. Understanding credit. Your credit score can have a great impact on your life and can affect what you’re able to purchase in the future. Credit scores are a mathematical assessment of the likelihood that you will repay the money you have borrowed from a credit card, personal loan, car loan, mortgage, and many others. By borrowing, making payments on time, paying down debt, and maintaining healthy spending habits, your credit score can improve.
  2. Taking out a loan and creating good habits. Be sure to only borrow what you need and can repay on time. This will help you to avoid falling into an unhealthy financial cycle. It is incredibly easy to take on more debt than you can afford, and whether the balance is secured or unsecured, the consequences for falling behind can be severe. The difference between a secured loan and an unsecured loan is that secured loans are backed by collateral, like a house or car, while unsecured loans do not have collateral backing them, like a personal or student loan, so interest rates can be higher for these. However, if you borrow wisely, you can achieve your financial goals quickly and affordably.
  3. Reducing debt. Once you have a loan or credit line, establish good credit history by using it responsibly. Keep balances low, always pay on time, and don’t pursue unnecessary debts. If you have multiple sources of debt, consolidating your debt can be a smart option. Sunward offers three different types of credit cards that have no balance transfer fees so you can consolidate your debt in an efficient way. You can find a credit card that best suits your needs at gosunward.org/credit-cards.

What you do today to manage your money can greatly impact your overall financial wellbeing now and into the future.