keys to credit what is credit? buy now – pay later financial tool binding contract buy now – pay...
TRANSCRIPT
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Keys to Credit
Keys to Credit
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What is Credit?What is Credit?
• Buy now – pay later
• Financial tool
• Binding contract
• Buy now – pay later
• Financial tool
• Binding contract
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Advantages of Using Credit Advantages of Using Credit • Establish credit history
• Use of item now• Safety• Take advantage of bargains
• Convenience• Emergency funds• Consolidate bills• Spending record
• Establish credit history
• Use of item now• Safety• Take advantage of bargains
• Convenience• Emergency funds• Consolidate bills• Spending record
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Disadvantages of Using Credit Disadvantages of Using Credit
• Tend to overspend
• Credit history damaged if misused
• Fees
• Interest (APR)
• Commits future income
• Tend to overspend
• Credit history damaged if misused
• Fees
• Interest (APR)
• Commits future income
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Ways to Minimize Credit CostsWays to Minimize Credit Costs
• Shop for the lowest APR
• Borrow only amount really needed
• Pay more than minimum monthly
• Shop for the lowest APR
• Borrow only amount really needed
• Pay more than minimum monthly
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Ways to Minimize Credit CostsWays to Minimize Credit Costs
• Pay cash whenever possible
• Take out a loan for the shortest time possible
• Pay bills on time
• Pay cash whenever possible
• Take out a loan for the shortest time possible
• Pay bills on time
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The 3 C’s of CreditThe 3 C’s of Credit
• Character
• Capital
• Capacity
• Character
• Capital
• Capacity
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Types of CreditTypes of Credit
• Installment credit
• Non-Installment credit
• Installment credit
• Non-Installment credit
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Paycheck LoansPaycheck Loans
• Borrow money against your future paycheck
• Always a loan fee
• Interest is very high
• Borrow money against your future paycheck
• Always a loan fee
• Interest is very high
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Information on Credit ReportsInformation on Credit Reports
• Identification & employment data
• Payment history• Inquiries• Public record information
• Identification & employment data
• Payment history• Inquiries• Public record information
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Sample Credit Report
Sample Credit Report
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Credit reports used by:Credit reports used by:
• Banks• Landlords• Car dealers• Insurance companies
• Retail stores
• Employers
• Banks• Landlords• Car dealers• Insurance companies
• Retail stores
• Employers
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Major Credit Reporting AgenciesMajor Credit Reporting Agencies
• Equifax
• Experian
• Trans Union
Offer free report every 12 monthswww.annualcreditreport.com
• Equifax
• Experian
• Trans Union
Offer free report every 12 monthswww.annualcreditreport.com
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FICO ScoresFICO Scores
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Sample Credit Report
Sample Credit Report
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Sample Credit Report
Sample Credit Report
![Page 18: Keys to Credit What is Credit? Buy now – pay later Financial tool Binding contract Buy now – pay later Financial tool Binding contract](https://reader030.vdocuments.mx/reader030/viewer/2022032516/56649c3d5503460f948e7d84/html5/thumbnails/18.jpg)
Sample Credit Report
Sample Credit Report
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If there are mistakes…If there are mistakes…
• Write CRA
• Explain error
• Include copies of documents
• CRA must check into
• Write CRA
• Explain error
• Include copies of documents
• CRA must check into
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Building a Credit RatingBuilding a Credit Rating• Open checking & savings account
• Apply for credit with your bank
• Buy something on time from a store
• Apply for a gas card
• Get a co-signer
• Open checking & savings account
• Apply for credit with your bank
• Buy something on time from a store
• Apply for a gas card
• Get a co-signer
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Most Important!!!Most Important!!!
Pay your bills on time
Pay your bills on time
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Misuse of credit can:Misuse of credit can:
• Ruin credit history & chances of qualifying for future credit
• Make it hard to find a place to live or get a job
• Result in bankruptcy
• Ruin credit history & chances of qualifying for future credit
• Make it hard to find a place to live or get a job
• Result in bankruptcy
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