Americans Use Credit What Can be Learned? –h–how credit affects our lives… cc redit - ll oan = credit cost of credit –a–amount owed >>> debt = ?? + ?? *principal*interest = ways to keep good credit –c–common credit traps

installment debt –  mortgage consumer durables -

Immediate NeedImmediate Need Spread PaymentsSpread Payments Establish Good CreditEstablish Good Credit Financial SecurityFinancial Security ConvenienceConvenience

3/9/08

charge account – –credit limit Regular  total amount charged >>> due / int. Revolving  additional purchases  minimum payment Installment  portion of payment >> interest & principal  interest = 18% - 25%

credit cards- –v–various uses?acceptance?  f ees…stores&users gg immicks: s pecial rates / rewards debit cards – dd oes not provide loan!! –a–acceptance = ATMs / combo :Visa & Mastercard (’92) -i-issues… 1-overdrafting2-international $$ 3-out-of-order trans.4- limited protection set limits [cash!]

finance charge = 1-previous balance 2-adjusted balance banks - charged interest >>> date posted –n–now >>> date purchased = $2 billion llllost or stolen!! APR = **introductory rates **transfer balance 3-average daily balance 4-past due balance comparison shop?

major credit bureaus: –Experian –Trans Union –Equifax Get a Copy!  $$$ / free? ---  information varies!!

Who Cares About Credit Reports? Financial institutions Mortgage lenders Landlords Insurance companies Employers

A Credit Report: 4 Basic Elements: Personal identificationPersonal identification Public records/Public records/ collections collections Payment historyPayment history InquiriesInquiries

Good Credit Vs. Bad Credit Good credit history: –little to no unsecured debt –record of timely payments Bad credit history: –large sums of unsecured debt –unpaid bills –large # of accounts –large # of inquiries

Reporting Limits: Inquiries- 2 yrs Late payments- 7 yrs Collections, judgments- 7 yrs Bankruptcies- 10 yrs Unpaid student Loans- None

Liquidating life… Duration… Still owe… –Taxes –Child support –Alimony –Fines  last resort –Co-signer obligations No longer owe… –Retail store charges –CC –Unsecured loans –Hospital or medical bills “fresh start”

federal & state >>> regulate –s–set ceilings uu sury laws – –p–protect & provide

Truth in Lending Act (68) –borrowing info >> costs & conditions APR / fees inform of changes unauthorized use >>> $ ?? limit Fair Credit Reporting Act (70) –privacy & accuracy refused credit  report summary >> challenge error >> update info ---- cooling off period

Equal Credit Opportunity Act (74) –p–prohibits discrimination dd enied >> why?? Fair Credit Billing Act (74) –c–challenge statement --- correcting mistakes Fair Debt Collection Practices Act (77) –p–prevents abuse (pro-collectors) Fair & Accurate Credit Transaction Act (05) CARD Act (09) {i.e. married women}