Have you ever been in a lot of debt that the mere thought of it causes you to lose sleep?

Do you feel overwhelmed trying to wrap your head around the possible way to offset these bad debts you have been carrying for some period?

Have you tried borrowing again and declined because no one trusts that you can pay back?

You are not alone in this mystery.

This article is to assist you in understanding how to borrow (personal loan) responsibly without hurting yourself or your lender in the process.

Let’s begin.

Understand Financial Leveraging And When To Use It

To begin with the fundamentals.

What do you understand by the term ‘Financial Leveraging’?

“Leverage is the use of debt (borrowed capital) to undertake investment or project. The result is to multiply the potential returns from a project.” – Investopedia

Simply, financial leveraging is using borrowed funds for purposes with monetary benefits. Look at it this way, borrowing a loan with a monthly interest of 5% and using the fund for an investment that yields 7% monthly is a solid deal.

I have a net profit of 2% after taking out the cost of getting the funds.

Understanding this concept equips you with good knowledge of what to use borrowed funds for and how best to sweat the funds. I know you still wonder how this concerns you because you borrow to sort domestic problems.

Yeah, that is one of the problems. It is intelligent to borrow loans for situations that are a bit above just domestic issues.

Always Keep Your Credit Scores Clean

I cannot overemphasize this enough.

Your credit score is your personality!

That is what people see when they see you.

That is the exact thing a firm sees when you apply to borrow from them.

Let’s play out a scenario so you understand this as simply as possible.

Imagine you have a friend with the name Peter. Peter came to borrow some funds from you last year, and he is yet to refund you. He is not even saying anything about it. You have asked him severally, but he kept dodging you at every corner. You have even moved on and accepted this as your cross. Sad!

Long story short, Peter sent you a message that he needs urgent funds to sort his rent. What is the first thing that comes to your mind?

Ooooh! 

If I am correct, do you remember the last one he came to collect?

Exactly! 

Except you are swimming in money, it would be tough to give out your hard-earned to a friend who never pays you back.

That is how firms see you if you do not keep your credit score in great shape. And that all loan firms have this information is more reason to take it seriously.

Deliberately keeping your credit score healthy will spur you to repay loans when due. This way, you can sleep with your eyes closed.

Conclusion

To reiterate, accessing funds when you need them is not the problem here, and not coming through with your repayment is where you start to sink into debt.

Once you understand the leveraging and how best to use it to your advantage and unapologetically build your credit score, you are not going to have a sleepless night worrying about loans repayment.

If you put these two secrets into practice, you are definitely on your way to a responsible borrowing lifestyle.