WHY CREDIT? Financial Unit

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Presentation transcript:

WHY CREDIT? Financial Unit For more Info: https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html#toc2

YOU SHOULD NEVER BORROW $ FOR CONSUMER PURCHASES!!!! Why Borrow $$? Make larger purchases before you have the total amount saved eg. house, car Use it to invest on an investment Convienence- you don’t have to carry cash YOU SHOULD NEVER BORROW $ FOR CONSUMER PURCHASES!!!!

What Is Credit? Credit is taking a loan from someone Line of Credit, Credit Card, Car loan, Mortgage How do you get credit? You need to Apply and be approved by the bank/company Interest rates are determined based on your credit score There are two main credit bureaus in Canada that track your credit: Equifax TransUnion

Who Can See Your Credit History? Banks Credit card companies Car leasing companies Mobile phone companies Insurance companies Governments Employers Landlords In general, you need to give permission, or your consent, for a business or individual to use your credit report.

They Use Your Credit Report To Make Decisions : lend you money collect a debt consider you for rental housing consider you for a job provide you with insurance offer you a credit increase

What Is In Your Credit Report? Info on every loan you've taken out in the last six years — What do they look for: Do you pay on time? How much do you owe? What is your credit limit? All these things factor into your credit score….

Credit Score Is a number between 300 and 850 The higher your number, the more trustworthy you are High number = Lower risk for lenders Under 600 = higher interest rates  Over 700= lower interest rates 

How to Keep a High Credit Score? DO Pay bills on time for the total amount Continue to borrow money and pay it back Accept credit increases (to a certain point) DON’T Purchase something you are not able to pay off in the time given Pay Late Miss Payments Pay off only the minimum payment Use your whole credit limit on your credit card Write Bad cheques Avoid payment and dodge creditor calls Commit Fraud

Why Your Credit History Matters… Affects Your Finances Determines future loans and Interest No Credit History = Risky Poor Credit=risky Result: harder to get a credit card, loan or mortgage. Could affect your ability to rent an apart. or get hired for a job Signs of Identity Theft Check for signs of identity theft yearly to make sure someone has not tried to open credit cards or other loans in your name

HOW TO BUILD YOUR CREDIT FROM SCRATCH Activity: Find the Perfect Credit Card for You Compare Credit cards Reward Pts Cash Back Interest Rates