Keep options open. budget on track when considering a loan

These days, consumers are not short on options for their borrowing needs. Whether remodeling a home, buying a boat, consolidating debt, paying for a wedding or simply looking to establish and build your credit history, there are loan products designed for various uses and with terms that can help fit many budgets.

While determining which loans are best for certain uses and budgets can seem overwhelming, there are some basic steps you can take to sort through your options and manage your finances wisely.

SPEAK WITH YOUR BANKER »

A thorough review of your accounts, budget, income and financial goals is a great first step.

Your banker can help with this review and provide guidance on the best options. For example, if you are just starting to build credit and want to establish a good history for later large purchases, opening a rewards credit card can be a great step.

Develop a plan to only use the credit card for certain purchases that you would normally use cash or your debit card for, then set that money aside to pay the credit card bill in full each month. That way, you’re establishing good credit history and not accumulating revolving debt.

HAVE A PLAN » If your credit is more established and you are looking for a lower interest option for a large purchase or debt consolidation, a personal loan may be a good fit.

Personal loans are unsecured, meaning you do not need collateral to get the money you need, and are set for a fixed amount that you pay back over a set amount of time. These terms can help you determine how much you can afford to pay back over the life of the loan.

A personal loan can be an especially good option for homeowners wanting to remodel but do not have enough equity built up for a home equity loan. Personal loans are good for smaller projects, too, as you can borrow as little as $2,000.

Other options for those with home equity or a savings nest egg could be a home equity loan or line of credit (HELOC), or to take out a smaller loan for a project while also using cash.

The key is to plan a strategy that best uses your financial standing and expected future expenses as a guide.

PROTECT YOUR FUTURE FINANCES » Part of your plan should also include preparing for emergencies. When determining how much you need (and should) borrow, consider your emergency savings status as well.

Make sure whatever amount you borrow and the terms don’t overextend your budget, leaving you in a precarious position if a medical or other emergency arises that you can’t immediately afford.

It’s important to avoid racking up credit card debt or using a high interest “payday” loan, as both can create a cycle that can hurt your finances and your credit.

PROTECT YOUR CREDIT » Every year, Americans are entitled to a free credit report from each of the three major credit bureaus, Equifax, Experian and TransUnion. Make sure you receive these reports and thoroughly review them. If you notice any discrepancies, report them immediately.

You can also set up banking and fraud alerts through your bank’s mobile or online site, as well as for any credit card accounts you have, to help monitor and protect your credit.

Taking these steps can help ensure that whatever stage of borrowing you are in currently, you can continue to maintain healthy credit building and your financial future.