Question 1

What is Credit?

Accepted Answer

Credit allows consumers to pay for goods and services today and spread the cost over time. It is an especially useful tool during emergencies, when you may need access to cash quickly.

However, taking on credit is a huge responsibility, which is underpinned by your ability and intention to repay. You should only borrow amounts that you can pay back comfortably.

Question 2

How Much Credit Can I Afford?

Accepted Answer

It's important that you take a long, hard look at your current and future financial situation before taking on any new credit.

A rule of thumb to determine how much credit you can take on is to compare how much you owe with how much you earn. The amount you owe, or debt, can include monthly payment loans such as auto and home loans, and credit card debt. A simple calculation based on these two parameters is called the debt-to-income ratio.

Question 3

What Do Lenders Look For?

Accepted Answer

When you apply for a credit card, personal loan or any other type of credit, the lender must first decide if you are a good credit risk.

Credit scoring is a system used by lenders to determine whether or not you are creditworthy. It is more heavily used when you apply for unsecured credit, including credit cards.

Creditors collect information about you and your credit standing from your credit application and through CIC. The information may include your bill-paying history, the number and types of accounts that you have, late payments, collection actions, whether you have applied for credit recently, outstanding debt and how long you have had existing accounts.

If you already have a lot of debt and are applying for more credit, the creditor may consider you to be over-extended and may deny your application. Your debt-to-income ratio would be the basis for their rejection because they may believe you might not be able to handle additional payments based on your income and existing obligations.

If you have applied with several lenders within a short time, each may have accessed your credit report and their inquiries are recorded in your file. Some lenders may reject an application if the credit report shows an excessive number of inquiries.

Question 4

Am I Headed for Trouble?

Accepted Answer

As a general rule of thumb, your debt repayments, including those on your credit card, should not exceed 40-50% of your take-home pay. If it does, you could be headed towards that danger zone where it is very difficult to rein in your debt.

If you're unsure that this may be happening to you, here are some warnings signs.

Regularly spending beyond your budget
Living from payday to payday
Being unable to meet large one-off expenses like household insurance
Always paying only the minimum repayments on your credit card bill each month
Not knowing how much your total debt is
Being near, or at, your credit card limit - especially if you have more than one card
Consistently paying bills late
Hiding your debt situation from your spouse or partner

If two or more apply to you, it could be time to cut back on your spending and reduce your debt.

Question 5

How Can I Control My Finances?

Accepted Answer

Getting your finances under control is not always easy and it can take time. But there are several targets you can set for yourself that will put you in greater control.

Each month, try to reduce a different spending category by 5-10%.

Start a savings account for large, infrequent expenses.

Charge items to your credit card only if you are sure you can afford to keep up with the monthly repayments.

Treat a credit card balance like you'd treat a bank loan for the same amount.

Avoid the 'sale' mentality.

Track your spending and income.

Try to increase your income if you can.

Reward yourself.

Question 6

What if My Debt Goes Out of Control?

Accepted Answer

If you feel that your debt is getting out of control, you must tackle the problem immediately.

Sit down and prioritise your responsibilities. For example, meeting essential repayments such as your mortgage and utility bills should be your first concern.

If you are paying off multiple credit card bills, you should pay off those with the highest rate of interest first.

Most lenders are sympathetic to people who cannot afford repayments. Recovering debt can be very expensive to them, so they are often willing to work out an agreement with you.

The best way to handle your worries about debt is to arm yourself with information - not just any information, but credible, reliable, and well-backed information on credit. When you grasp the reality of the situation, it will calm your fears.

If you pay Full Payment Due of last statement, your next Payment Due Date will be 17 days from Statement Date	For example: Your 1st Statement date is 4 Jan 2022, Payment Due Date of the 1st Statement is 21 Jan 2022, Total Payment Due is VND 2,000,000:	If you pay the Total Payment Due (VND2,000,000) by 17 Jan 2022, your next Statement date is 4 Feb 2022 and Payment Due Date of the next Statement is 21 Feb 2022.
If you pay less than Full Payment Due of last statement, your next Payment Due Date for will be 25 days from Statement Date		If you pay less than the Total Payment Due (less than VND2,000,000) by 21 Jan 2022, your next Statement date is 4 Feb 2022 and Payment Due Date of the next Statement is 1 Mar 2022.

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