Credit Risk Profile Youths from the
Institute of Consumer Financial Education
Are You Seeking Credit
or Charge Cards?
Will You Be A Good Credit Risk?
Written by Paul S. Richard - ICFEs Executive Director
Are you considering signing a credit card application?
Before you do, especially if it is your first credit card
you are applying for, answer the questions below to determine
your credit risk profile. With money or credit comes decision
making responsibilities. These true or false questions
will help you understand how well you (might) manage credit-based
spending and also provide some insight on why you want
to obtain credit. Mark your answers true or false. Scoring
is on the next page.
Having a credit card (will give me) gives me a sense
I (will be buying) purchase more from retailers
who extend credit
I often pay for eating out or purchase gifts to
Credit cards (will) help me improv e
Having credit (will) allow me to buy major items
I want now.
I often argue with myself or others about over-spending.
My savings balance is negatively affected by credit-based
I often have trouble recounting money I have spent
during the day.
Others I know overspend, and it doesn't seem to
hurt them financially.
My closet is full of things I have only have worn
once or twice.
Many things I have purchased I wish I hadn't when
I get home.
I'm often a bit late with some payments, but it
doesn't matter much.
I have borrowed money from relatives and friends
I make impulse purchases at the last minute to make
me feel better.
I charge things (meals, gas, etc.) that are gone
when the bill arrives.
None True_ A true
credit-worthy person, you are, (or should be )
1-2 True_ Just barely "OK"
observe the caution signs now. If any of the statements
were marked "true," developing and strengthening
financial self-discipline is more necessary and
urgent than obtaining a credit card or an additional
credit card or even an expanded line of credit.
For example, if savings and accumulation (question
seven) will be (or is) negatively affected by
credit-based spending, priorities are out of order.
No matter if income is sufficient enough to pay
in full the credit card bills when they arrive,
if there is no money left over with each paycheck
to put into savings and investments, credit is
being abused and is most likely fueling over-spending.
3-5 True _ Danger ahead! Suspend
all credit based spending now. If more than three
questions were marked "true", better
put that credit card application on hold. Next,
look for ways to improve spending Practices such
as comparison shopping techniques and increase
savings through better spending.
If you presently are holding more than one credit
card with an out-standing balance, put them on
ice* or cut them up AND return them to the issuer.**
Don't apply for more credit or make any credit
based purchases until all outstanding balances
are paid in full.
5-10 True_ You are close to becoming
a "debt-head," avoid credit all together.
If more than five questions were marked "true",
this isn't the time for you to be considering
any sort of credit-based spending. If some sort
of card is needed for convenience or business
travel, as an example, consider a debit card.
11-15 True _ Confirmed plastic
spending addict. Financial melt-down ahead.
* Put your credit cards in a glass of water in
the freezer. "If you have to go home and
defrost your credit before you charge something,
you have time to decide whether the purchase is
a wise one."
** Credit Cards belong to the Issuer. If cut-up
and simply discarded, the Issuer doesn't know
you are closing the account and it will show a
zero balance and available credit. this could
preclude you from getting credit when you have
a legitimate need.