credit 101 a
DESCRIPTION
Discussion of credit cardsTRANSCRIPT
Credit101
Hey, can I borrow some money and I will pay you back
later?
Credit is a promise to repay an obligation or debt.
What is “credit”?
A credit transaction occurs when one party agrees to loan
money to another party.
What is a “credit transaction”?
The first party is called the creditor or lender.
Who is involved?
The second party is called the debtor or borrower.
A credit report or credit history is a record of an individual's or company's past borrowing and repaying, including information
about late payments and bankruptcy.
What is a “credit history”?
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report
information, typically sourced from credit bureaus.
What is a “credit score”?
A credit bureau is a company that collects information from various sources and provides
consumer credit information on individual consumers for a variety
of uses.
What is a “credit bureau”?
EquifaxExperian
TransUnion
The Big 3
Together, they operate annualcreditreport.com where one can go to see their personal credit
score.
What does a credit score look like?
The FICO (Fair Isaac Corporation) score is simply a 3-digit number!
765 678 524
What determines you credit score?
35%
15%30%
10%
10%Payment HistoryCredit HistoryOutstanding DebtsNew CreditCredit In Use
Payment history is a record of delinquent payments, generally being
more than 30 days, will lower the credit rating.
What is “payment history”?
A credit history or credit reputation is a record of an individual or company's past
borrowing and repaying behavior.
What is a “credit history”?
Outstanding debt is the most common form of consumer debt. It
is the unpaid portion of a debt which may include interest in
addition to the balance.
What is a “outstanding debt”?
New credit is when an institution takes a look at your credit report
because you applied for some type of credit opportunity.
What is a “new credit”?
Credit in use refers to the types of credit accounts that you have. They include revolving credit (credit cards
and lines of credit), loans, public records (bankruptcy or liens) and
collections from an agency.
What is a “credit in use”?
Credit – the borrower’s willingness to pay.
What are the “3 C’s of Credit”?
Capacity – the borrower’s ability to repay the debt.
Character – the borrower’s stability.
The Fair Credit Reporting Act is designed to protect consumers by
ensuring that Credit Reporting Agencies use reasonable and confidential procedures, while
providing businesses with correct and complete information!
What are your rights?
It is recommended that an individual checks their credit report annually by either going to all 3 specific CRAs ($)
or by utilizing annualcreditreport.com.
Should you check your credit history?
Report it to the CRA immediately! They are required by law to
investigate any claim within 30 days.
What do you do if you find an error?
Savings Account Under the Mattress
Certificate of DepositMutual Funds
BondsStocks
Money Management!RISK:LOW
HIGH
REWARD:
LOW
HIGH
Are there any questions that you have before we
begin the project?
QUESTIONS?
Good luck!
Have Fun!
Be Creative!