With my own experience for almost 20 years as an employee, I have learned so much to share the Ups and Down in my entire life.
Lets focus on the opportunity of building the credibility with the banks and other financial institutions. You need to established first an outstanding relationship with them, for you to avail the chances of getting a loans or credit cards. Trust is building up at the same time.
Once you got the trust from them they will offer all the credit facilities they have. With the endorsement of this financial institutions you can easily apply for a loans (personal and commercial) and automatically they will offer you the credits card facilities. This facilities were classified into two categories, the "High Risk Loans and the collateral Loans". The high risk loans like personal, car, housing loans and credit cards, are the credit facilities that does not require any collateral. The basis of granting this facilities is "trust" with of course some personal background check. The endorsement will come from your family, friends and employer. In a matter of days this loans will be process and and approved. It feel so good the moment this loans are granted, as if you just won from the lotto lottery. But remember this loans are granted base on your personal background and capacity to pay.
The Low Risk Loans are those with collateral, like back to back bank loans and other loans which i am not familiar with. The back to back bank loans are facilities that requires a time deposit or investment to guarantee the loans. If you will analyze this loans and picture out the earning from your interest rate of your savings over your loans you will see a minimal difference that is favorable to the banks. But in totality it is just like you used your own money and in the end if you make an accounting with the interest from savings and the interest from loans, you will end up on a negative balance. That's what the financial institution will not tell you.
Now with the personal loans and the credits card. The moment you have this facilities, we have the instinct of spending them. It is now your own ability on how to spend it wisely. This loans are given to you because the financial institution knows that you can pay it base on your financial capacity. So, it is very useful and helpful on the other side. Problem here is, the moment your out of work, the company closed, lay off from work and retrenchment. Here comes your Big Risk which the bank will not understand you.
You can think of some answers by making an arrangement with them by reducing your monthly amortization in your capacity to pay for the reason that your out of work. They might consider it but some further evaluation and investigation will take effect before approving such agreement. But what if you don't have income or work for almost 3 to 6 months? Definitely, the bank interest will shoot up high and the pressure comes in. To the point that you will be delinquent debtors.
Generally it is your obligation to spend or use the facilities with limitations. It is also advisable that you are not an impulsive buyer, because it is so easy to swipe and sign the card.
