chapters 17 & 18

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Chapters 17 & 18. Credit Records and Laws & Responsibilities and Costs of Credit. Credit Records. Credit history Credit bureau 3 largest credit bureaus. Credit Records. Credit report Subscribers . Public Info. - PowerPoint PPT Presentation

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  • Chapters 17 & 18Credit Records and Laws&Responsibilities and Costs of Credit

  • Credit RecordsCredit history

    Credit bureau

    3 largest credit bureaus

  • Credit RecordsCredit report

    Subscribers

  • Public Info________ ________are searched for information to add to your credit file:

  • Creditworthiness5 Cs of Credit_________ responsible attitude toward living up to agreements; also stability__________ financial ability to repay a loan__________ net worth should be sufficient to repay debt__________ general economic conditions; job security__________

  • Personal Info (asked on a credit app.)nameage incomenumber of dependentsresidenceobligation to pay child supportaccounts in your namelist of assetsemployment historyrent or ownresidence historyoutstanding debt

  • Building Credit1) Begin with a ______________2) Open a _______________3) Open a __________________4) Apply for a ________________5) Get a __________

  • Credit RatingsCredit rating

    Point system (FICO score) assigns points based on amount of current debt, no. of late payments, no. of open accounts, employment, income, etc. (300-850)

    Rating system excellent, good, fair, poor

  • Rating SystemExcellent - (A-rating)

    Good (B-rating)

    Fair

    Poor

  • Sections of a Credit Report

  • Credit LawsConsumer Credit Protection Act (Truth- in- Lending Act) -

    Limits liability to $50 for stolen cardsFair Credit Reporting Act

  • Credit LawsFair Credit Billing Act

    If you find an error, send a letter within 60 daysCreditors must acknowledge the error within 30 days and resolve it within 90 days

    Equal Credit Opportunity Act -

  • Credit LawsFair Debt Collection Practices Act eliminates abusive collection practices by debt collectors; restricts the time and frequency of collections; collectors cannot use threats, obscenities, false and misleading info, or intimidation.Debt collector

  • Responsibilities of Consumer CreditResponsibilities to ____________Use credit wiselyCheck out businessesComparison shopResponsibilities to ___________Limit your spending to what you can repayRead and understand the terms of your credit _________ Responsibility to _____Assist consumer in making wise purchasesInform customers about rules, fees, etc.Cooperate with reporting agenciesHave sound lending practices and fair collection methods

  • Protecting Yourself From FraudSafeguard Your Cards

  • Protect your cards OnlineDeal only with companies online that you know and trustLook for the browser symbol that indicates a secured siteMerchants should state privacy policiesLook for watchdog group seals (Better Business Bureau, TRUSTe)

  • Avoid Unnecessary Credit CostsAccept only the amount you needUnused credit Do not increase spending when income increasesKeep number of cards to a minimumPay cash for purchases under $25Understand the cost of creditShop for loansTime your credit purchases carefullyTake full advantage of rebate programs

  • Credit VocabFixed-rate loans

    Prime rate

    Simple interest

    Principal

  • Credit Card Billing StatementsAdjusted Balance Method

    Previous Balance Method

    Average Daily Balance Method

    *