Explaining the Dynamics of Debt and Credit

Debt and credit are the two significant terms we must define before we proceed further. The amount that an individual or corporation borrows from someone (e.g., banks) is called debt. On the other hand, the credit is the legal agreement which defines that the borrower will return the amount within the specific period along with interest. So, you’re creating debt when you’re using your credit card.

Now, that the definition and differences are clearly understood, it’s time to take a look at the pros and cons of using credit. The Credit Bureau monitors all the relevant activities. Enhancing the public’s risk management abilities is the vision of the Monetary Authority of Singapore that is being fulfilled with the help of Credit Bureau Singapore.

Pros and Cons of Using Credit

If you want to use the credit or credit card, you must take a look at their pros and cons.


  • Enables you to purchase your desired products right away
  • No need to be worried about carrying any cash
  • Keeps a record of purchases automatically
  • Offers more convenience


  • Have additional Fees
  • Elevation in impulse purchase may occur
  • Interest particularly on expensive items
  • Financial difficulties may arise

3 C’s Of Worthiness

Here are a few questions you must ask yourself to find if you’re capable of using the credit or not.

1. Character (Check if you’re eligible for a loan)

  • How long you’ve been at the current occupation?
  • Are you capable of providing a couple of character references?
  • Do you have a good credit score? Do you pay bills on time?
  • How long You’ve lived at your current address?
  • Does your credit report show that you honestly pay back the debts?

2. Capacity (Check Your Ability to repay the debt)

  • What are your current debts?
  • How much is your salary?
  • How many people are dependent on you?
  • Can your current income support your credit usage?
  • How many loan payments you have in total?
  • Is your job stable and steady?

3. Capital (See if you have a back-up)

  • Are there any investments you can use as collateral?
  • Do you have any other assets that can be used to repay debts?
  • Do you have a savings account?

These are the primary elements you must look for when deciding whether you’re capable of applying for a credit card or loan. You can also evaluate your responsibilities as a borrower with the help of the information shared above.