the generations fcu presentation on credit
TRANSCRIPT
CreditBe afinancialgenius
Advantages of credit
Get it now
No cash…No problem.
Keeps records
Easy
Consolidates
Disadvantages of credit
Interest & fees
Financial difficulties
Impulse buying
The four “C’s” of credit
1. Character2. Capital3. Collateral4. Capacity
• Single Payment• Installment• Revolving
Types & sources of credit
• Borrow only what you can repay
• Pay on time
• Keep creditors in the loop
• Report lost or stolen credit cards
• Don’t share personal information
Using creditresponsibly
• Steady work
• Pay existing bills
• Grow savings
• Clean checking account
• Credit card or small loan
Building credit
20 - 10Rule of:
Example:
$24,000 / year
$24,000 X 20% = $4,800
Exception: Mortgage/Rent payment should not be counted in the 20%
Rule: Never borrow more than 20% of Net Income.
Example:
$2,000 / month after taxes
$2,000 X 10% = $200
Exception: Mortgage/Rent payment should not be counted in the 10%
Rule: Monthly payments shouldn’t exceed 10% of
monthly Net Income.
StartingEarly
StartingLater
A Lifetimeof Investing
Age Invested Age Invested Age Invested 16 $1,000 16 $1,000 17 $1,000 17 $1,000 18 $1,000 18 $1,000 19 $1,000 19 $1,000 20 $1,000 20 $1,000 21 $1,000 21 $1,000 22 $1,000 22 $1,000 23 $1,000 23 $1,000 24 $1,000 24 $1,000 25 $1,000 25 $1,000
26 $1,000 26 $1,000 27 $1,000 27 $1,000 28 $1,000 28 $1,000 29 $1,000 29 $1,000 30 $1,000 30 $1,000 31 $1,000 31 $1,000 32 $1,000 32 $1,000 33 $1,000 33 $1,000 34 $1,000 34 $1,000 35 $1,000 35 $1,000 36 $1,000 36 $1,000 37 $1,000 37 $1,000 38 $1,000 38 $1,000 39 $1,000 39 $1,000 40 $1,000 40 $1,000 41 $1,000 41 $1,000 42 $1,000 42 $1,000 43 $1,000 43 $1,000 44 $1,000 44 $1,000 45 $1,000 45 $1,000 46 $1,000 46 $1,000 47 $1,000 47 $1,000 48 $1,000 48 $1,000 49 $1,000 49 $1,000 50 $1,000 50 $1,000
*estimate assumes 5% interest w/$1,000 contributed yearly before interest is applied.
total investment$10,000
total interest earned$39,240
at age 50$50,240
total investment$25,000
total interest earned$27,500
at age 50$53,500
total investment$35,000
total interest earned$64,350
at age 50$100,350
Payment History
35%
Amount Owed30%
Length of Credit His-
tory15%
New Credit10%
Types of Credit Used10%
A+ABCDF
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780 – 850 720 – 779660 – 719 560 – 659 500 – 559 300 – 499
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