CREDIT PART 4 THE LAST POWERPOINT ! Mr. Stasa – W-E City Schools ©

SCHEDULE FOR THE REST OF THE SEMESTER:  Today: Finish the Credit Unit (Part 4)  Next week: review for the final exam  Seniors next week:  Final exam periods 1-4 Wednesday, May 27  Final exam periods 5-8 Thursday, May 28  Underclassmen:  Tuesday, June 2 Kahoot review game  Final exam periods 1-3 Wednesday, June 3  Final exam periods 4-6 Thursday, June 4  Final exam periods 7-8 Friday, June 5 Use your study guides to study!

THE SCHUMER BOX  The Federal Truth and Lending Act requires all credit card companies provide a listing of terms and fees in an easy-to- read box on every credit application referred to as the Schumer Box. Items listed include:  Annual fee  Annual percentage rate (APR)  Other APRs (balance transfer, cash advances)  Grace period  Finance calculation method  Other transaction fees (late payments, exceeding credit limit fee)

MINIMUM WAGE UPDATE!  On January 1, 2015 the Ohio minimum wage increased $0.15 from $7.95 to $8.10 per hour.  The U.S. Federal minimum wage remains at $7.25 per hour

IS NEGATIVE INFO THE ONLY DATA REPORTED TO CREDIT BUREAUS?  No. Both positive and negative credit information is reported to credit bureaus.  Negative credit information will remain on a credit report for up to 7 years.  Positive credit information will remain on a credit report for as long as the account is open.  Closed accounts in good standing will remain on a credit report for up to 10 years.  Bankruptcy will remain on a credit report for 10 years

BESIDES BEING DENIED CREDIT, WHAT OTHER IMPACTS CAN NEGATIVE INFORMATION ON MY CREDIT REPORT HAVE?  Auto insurance rates can be higher  Denied employment  Denied certain utilities  Denied housing REVIEW-ish

WHAT CAN I DO WHEN I’M 18 TO START BUILDING A CREDIT HISTORY?  Place your cell phone account into your name  Open a bank or credit union account  Take out a very small affordable loan from your bank or credit union and pay it off quickly ($1,000 minimum in most cases)  Open a secured credit card  A secured credit card allows a person at least 18 years old to load money onto a prepaid credit card and use it for daily purchases.  The consumer cannot spend more than what’s loaded on the card.  You do not have to have good credit to be approved.  A small monthly fee may apply (approx. $3.00) EVEN FEDERAL STUDENT LOANS CAN ESTABLISH CREDIT HISTORY

CAN ANYONE WHO’S 18 OPEN THEIR OWN CREDIT CARD BY THEMSELVES?  No. Due to the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit Card Act) anyone under the age of 21 will require a co-signer OR prove they have sufficient income to make payments.  A co-signer will be equally responsible for any unpaid debts or fees.  Any negative activity on the account will equally affect the co-signer’s credit score and credit report.

CAN A PERSON EVER HAVE TOO MUCH CREDIT EVEN IF THEY HAVE A GOOD CREDIT SCORE?  Yes. Having too much credit of any credit type can make you appear too risky to a lender.  You should try to have equal types of credit (revolving, open, and installment)  Having a lot of credit in good standing will not have a negative impact on your credit score.

WHAT IS A GOOD INTEREST RATE TO HAVE ON A CREDIT CARD?  The interest rate that credit card companies charge their customers is called APR (annual percentage rate).  The average credit card interest rate is 18%  Credit union credit cards have APR rates on average of 7% and cannot be higher than 18%.

ONCE AN UNPAID DEBT FALLS OFF OF MY CREDIT REPORT, AM I STILL REQUIRED TO PAY IT?  Ohio’s statute of limitations states that creditors cannot take legal action (sue) to demand payment after 6 years of unpaid debt.  Once a debt falls off of your credit report after 7 years, some creditors may try to convince you to make payments on an old debt  It is illegal for an old debt to reappear on your credit report after 7 years UNLESS you make arrangements with a creditor to resume making payments  Debt can be re-aged once it falls off your credit IF you agree to repay it. It will then legally reappear on your credit report.  Debt never goes away until it is repaid.

DOES MAINTAINING A BALANCE ON MY CREDIT CARD HURT MY CREDIT EVEN IF I MAKE THE REQUIRED MINIMUM PAYMENTS?  Credit bureaus separate card users into revolvers and transactors.  A revolver is a card user who maintains a balance on their credit card by only making the minimum payments.  A transactor is a card user who always pays their balance off at each billing cycle.  Transactors are viewed more positively by lenders and credit card companies than revolvers.  Your credit score will increase if you are a transactor