How To Buy with Credit

What’s on your list of things you may want to purchase soon? Perhaps it’s new furniture, a car or a home. Or it could be a student loan for yourself or your child.

Using Credit

For most of us, this will mean financing the purchase by using some form of credit. Purchasing something “on credit” is simply the process of receiving a good or service from a creditor now and paying the creditor back for it on a pre-established date or over a period of time. 

A creditor keeps track of your payment patterns and reports your payment history on a regular basis to a credit reporting agency, documenting how well you are repaying your obligation. New creditors will, with your permission, want to review your credit history when considering extending credit to you for future purchases or loans. For this very reason, it is important to establish and maintain a solid personal credit history to demonstrate your creditworthiness to current and potential creditors.

There are three types of credit to consider:

  • Installment credit –  This includes loans for cars, student loans, mortgages and personal use. The biggest benefit of these types of loans are they provide predictable payments in both amounts and due dates, making it easier for you to budget for. 
  • Revolving credit – Credit cards, personal lines of credit and home equity lines (HELOCs) are types of revolving credit. These are accounts that have a credit limit which you can’t exceed and usually do not have an end date as long as the account remains in good standing. Remaining in good standing means payments are made and are made on time.
  • Utility credit – This includes credit accounts to users of gas, electricity, phone, cable, and internet services. With these types of accounts, you are able to get service now and pay for it on a monthly basis.

To maintain a positive credit history, begin by fully understanding any of your credit agreements. Know the terms and conditions, the due dates, interest rates and any fees associated with the credit agreement. Another way to develop and maintain good credit is to pay your credit accounts on-time each month. If you are having trouble making payments, speak with your creditor(s) as quickly as possible to learn about available payment alternatives to protect your credit.

Bonus Tip: As part of using credit responsibly, you will want to check your credit report periodically for accuracy as well as to prevent possible fraud or identity theft. Federal law allows for you to receive a free copy of your credit report every 12 months from each credit reporting agency – TransUnion®, Equifax® and Experian®. That’s three free credit reports each year! For more information and to get your free credit report, visit

A Journey to Personal Financial Success

At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.

Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.

Becoming an MFF Fellow

Our Standards of Financial LiteracyLearning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.

Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.

Learn More about Money

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