Personal Finance Section 4.3

Prompt:

Explain what debt to income ratio is. Then, think about your future income in your planned career. What is will your debt to income ratio be? What can you do now and in the future to keep a high credit score? What specific actions will you avoid so that you credit score won't go down?

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What's debt to income ratio?

This ratio is one of the better known measures to use when referring to household debt load.

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What can I do now and in the future to maintain a high credit score?

To maintain a high credit score, I need to pay my bills on time, every time. I won't get too close to my credit limit, and I will only apply for credit that I need both now and in the future. I will make sure to to have a long credit score by paying my bills early.

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What will I avoid to make sure my credit doesn't go down?

  • Ignoring library fines and parking tickets
  • Renting a car with your debit card
  • Not paying off car loans
  • Mistakes when signing up for cable, internet, closing credit cards, or getting a new cell phone
  • Not using your credit cards
  • Cancelling a gym membership

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