If you’re smart with how you use credit, it can help put big goals within reach. Follow these tips to borrow money with confidence. 

5 tips for smart borrowing

Stick with lenders you trust

Getting exciting loan offers from companies you’ve never heard of? Before taking on debt with any lender, you’ll want to do some research. You should expect reputable, trustworthy lenders to be transparent and upfront with you when it comes to the types of loans they offer and the terms that come with them. And if you already have a relationship with the lender—like your current bank or credit union—that relationship may make it easier to tap into them for quick advice about the loans they offer and what to expect with the approval process. 

Consider consolidating

Multiple debts can be really challenging to manage—so think about a consolidation loan. Depending on your situation, pulling all your debts together into one new loan could make things easier. It could lower your monthly payments, get you a better interest rate, or both! Crunch the numbers yourself—and check with an expert if needed—to get a clear picture of how consolidating would affect your budget, repayment plan, and credit score. 

Take advantage of promotional offers

Don’t forget that credit cards that offer an introductory offer—like 0% intro APR for the first 12 months—can be used to consolidate outstanding balances or help you pay for big purchases. Keep in mind: These cards charge a higher interest rate after the introductory period expires—so try to pay off your full balance before the rate goes up. And always pay at least your minimum payment each month, regardless. 

Homeowner? Flex your equity

Even if you don’t have much credit history, if you’re a homeowner, you can use the equity you have in your home to take out a loan or line of credit (aka, a HELOC). This can be another way to get the funds you need at an attractive interest rate. Quick tip: To figure out your home equity, subtract what you still owe from the original loan amount or appraised value of your home. 

Watch out for ...

Payday loans, title loans, tax refund anticipation loans, and other risky types of loans—lenders offering these may not have your best interests in mind. These types of loans typically have very high (and costly) APRs. 

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Debt versus savings calculator

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