University of Illinois Extension

Decide How Much Credit Is Too Much

Most of us use credit. Credit lets you use goods and services while you pay for them. But too much credit can lead to problems. How do you know if you're using too much credit?

The first step is to add up all of your credit. Don't count your mortgage or your rent. List all of your auto loans, school loans, personal loans, and time-payment loans as well as the credit card balances you usually carry from month to month. Then enter your average monthly payment for each loan and the amount you usually pay each month on your credit card balances.

If you usually make only the minimum monthly payment on your credit cards, you'll underestimate your true debt rate. How much would you have to pay each month to pay off your credit card balances in a reasonable period of time, such as six or twelve months? Use that number to figure your debt rate for a truer picture of your debt level.

List of All My Loans and Credit Cards Average Monthly payment
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Total Monthly Debt payments $

 

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