Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved1 Introduction Credit is an important financial concept that can affect you in hundreds of ways, both good and bad. First, you must work hard to establish a good credit history. Banks and businesses routinely use your credit history and the 3 Cs of Credit to answer the following questions. Then, you must work even harder to maintain it so you will be able to buy a car, home and send your kids to college. Have you been responsible repaying debt? Do you have the ability to repay new debt? How much should you be charged for using credit?

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved2 Objectives Identify what credit and debt are and explain how are they related You should be able to do the following after completing this lesson Discuss the advantages & disadvantages of using credit Review how the ECOA & FCRA laws protect you Summarize why retail businesses extend credit to their customers Explain what a credit bureau does and why they do it Describe how your credit history, credit report and credit score are used Discuss how you can establish a credit history Discuss how you would repair your credit history after it is damaged Define consumer protection laws, credit bureau, credit report/scores and other key terms from this lesson

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – What is Credit? What credit and debt are and what they represent How and when debt is assumed The legal obligation associated with debt In this section, you will learn The relationship between credit and debt Effects of Credit Purchases Exercise You will run the following Interactive Exercise

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Advantages and Disadvantages of Credit About the advantages & disadvantages of credit How an advantage might also be a disadvantage How credit affects average people What credit makes it easy to do In this section, you will learn What having good and bad credit equates to Monthly Payment Calculation Example You will run the following Interactive Example

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Credit Protection Laws What credit protection laws are also called What the Equal Credit Opportunity Act is and does What the Fair Credit Reporting Act is and does What a credit history is Why a credit history is considered sensitive information In this section, you will learn What consumer protection laws do

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Retail Credit The reasons retail businesses extend credit to their customers How buying on credit affects the cost of retail items What the cost of a retail item purchased on credit consists of In this section, you will learn Retail Credit Cards Example You will run the following Interactive Example

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Credit Bureaus What a credit bureau is and what they do What they do with the information they collect What determines what they can do with the information What they are sometimes called In this section, you will learn The names of the major credit bureaus

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Credit Report What a credit report is How many sections of information are in a credit report What is included in the Identifying Section What is included in the Inquiry Section What is included in the Credit Information Section What is included in the Public Record Section In this section, you will learn Why the format of a credit report might vary

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Credit Score What a credit score is and why they are important The potential range for credit scores Why a credit score is sometimes called a FICO score Whether most people think they are fair In this section, you will learn What information is used to determine your score What the average score is in the US Loans & Credit Reporting Exercise You will run the following Interactive Exercise

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Establishing Credit Why it is important to establish credit before you need it The dilemma young people face Why you should start slow Why a checking and savings account are important Why you should review your credit history How a store card or personal loan can help you In this section, you will learn Why it is important to pay your bills on time

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Using Credit Wisely What it means to maintain your credit history Why you should not purchase more than you can pay for Why it is bad to have too many credit cards Why you shouldnt max out your credit cards Why it is important to pay your bills on time In this section, you will learn What it means to use credit wisely

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved – Repairing Your Credit Which is easier - Using credit responsibly OR Repairing your credit The 2 things you must do to repair your credit Why is it essential to monitor your credit history Why it is important to reduce or eliminate your debt Why you cannot spend more than you make while repairing your credit In this section, you will learn What happens if you dont pay your bills on time

Lesson 8.3 Establishing Credit July 2011Copyright © … REMTECH, inc … All Rights Reserved13 Discussion Questions What aspects of life are affected by an individuals credit history? What is an extended credit score?