Borrowing basics

The sensible use of debt can be an important part of a healthy financial strategy. Borrowing can help you achieve goals that might otherwise be out of reach—but too much or poorly managed debt can create stress and financial challenges.
 
Developing strong borrowing habits early can help you stay in control and build a more secure financial future.
 

Understand the basics of borrowing

Borrowing always comes with a cost. When you repay a loan, you are paying back more than you originally borrowed.
 

Borrow for the right reasons

Focus on borrowing for things that provide long-term value, such as education or a home, rather than short-term or unnecessary expenses.
 

Plan for repayment

Make sure you can comfortably afford the required payments before taking on new debt.
 

Review your debt regularly

Refinancing loans or adjusting terms may help reduce costs over time.
 

Build and maintain strong credit

Your credit history plays a key role in your ability to borrow and the interest rates you receive.
 

Understand your credit report

Lenders review your credit report when you apply for a loan. A strong credit record can improve approval odds and help you qualify for better terms.
 

Keep your report accurate

You’re entitled to one free credit report each year at www.annualcreditreport.com.
 

Contact credit bureaus if needed

 

Prepare before applying for a loan

Having the right information ready can make the process smoother.
 

Proof of income

You may need recent pay stubs or a W‑2 form.
 

Tax returns

Larger loans may require one or more years of tax returns.
 

Personal financial statement

A summary of  your assets and liabilities helps lenders understand your financial situation.
 

Understand what lenders look for

Lenders evaluate several factors when reviewing a loan application.
 

Employment history

A stable income helps demonstrate your ability to repay.
 

Residential stability

Consistency in your address can build lender confidence.
 

Payment history

A track record of on-time payments shows responsible borrowing.
 

Debt-to-income ratio

Lenders compare your income to your existing debt obligations.
 

Assets

Your savings and investments can support your overall financial profile.
 

Practice common-sense borrowing

Simple habits can help you stay in control of your debt.
  • Never borrow more than you can repay
  • Avoid financing luxury purchases if essentials are a concern
  • Prioritize your borrowing needs
  • Keep borrowing capacity for emergencies
 

Compare borrowing options carefully

Understanding the full cost of borrowing helps you make better decisions.
 

Credit cards

Compare rates, fees, and benefits. If you carry a balance, focus on lower interest rates.
 

Mortgages

The right mortgage should balance rate, term, and payment stability based on your goals.
 

Get help early

If debt becomes difficult to manage, taking action early can make a big difference.
 

Pause additional borrowing

Stop using credit cards or adding new debt.
 

Contact your lenders

Many lenders can offer flexible payment options if you reach out.
 

Be cautious of quick fixes

Avoid services that promise to “fix” your credit for a fee. Look for trusted, nonprofit assistance if needed.
 

We can help

If you have questions about borrowing or want help developing your financial strategy, visit a branch, call 1-800-288-3425, or connect with us through Think Online.