Interest and finance charges can be claimed as deductions on federal income taxes. Overspending is more likely to occur. Because credit is convenient to use, some consumers fall into the trap of impulse spending rather than planned spending. There is also the tendency to look only at the required minimum monthly payment and not the total amount of the debt. Credit usage commits future income.
Borrowers are liable for their debts regardless of changes that occur in the future.
If your income changes due to a job cutback or layoff, or an illness or disability, the debt that seemed easy to manage earlier could become a major threat to financial security. Or, if living expenses increase but income does not, that debt would add to the drain of monthly expenditures. To qualify for credit, you must show potential creditors that you are creditworthy. While companies use various criteria to judge credit qualifications, ability to repay debt and willingness to do so are the primary considerations. While scoring systems vary from one creditor to another, characteristics usually examined include income , which measures ability to repay, and credit history , which indicates willingness to repay.