Credit and Credit Cards Good Credit Bad Credit No Credit Good Credit Bad Credit No Credit

What Do You Know? What is a credit card?  (A) A loan that has to be paid off every month.  (B) An arrangement by which you can buy something now, with the promise that you will pay for it in the future.  (C) A money substitute for items you cannot afford.  (D) All of the above.  (A) A loan that has to be paid off every month.  (B) An arrangement by which you can buy something now, with the promise that you will pay for it in the future.  (C) A money substitute for items you cannot afford.  (D) All of the above. B

What are the advantages of having a credit card?  (A) It takes all the worry out of buying things, because you know the money will be there when you need it.  (B) You don't have to carry cash or wonder whether someone will accept your check.  (C) It doesn't cost anything to use it.  (D) All of the above.  (A) It takes all the worry out of buying things, because you know the money will be there when you need it.  (B) You don't have to carry cash or wonder whether someone will accept your check.  (C) It doesn't cost anything to use it.  (D) All of the above. B

Why is it important to have good credit?  (A) To be eligible for a job.  (B) To buy a car and get auto insurance.  (C) To rent an apartment or buy a house.  (D) All of the above.  (A) To be eligible for a job.  (B) To buy a car and get auto insurance.  (C) To rent an apartment or buy a house.  (D) All of the above. D

As an adult, what do lenders look for before they lend you money?  (A) What kind of grades you earn.  (B) Whether or not you pay your bills on time (your credit history).  (C) Your intended date of graduation.  (D) All of the above.  (A) What kind of grades you earn.  (B) Whether or not you pay your bills on time (your credit history).  (C) Your intended date of graduation.  (D) All of the above. B

How can you build a good credit history?  (A) Only use your credit card when you know you can afford to use it.  (B) Establish other forms of credit - like a checking account, debit card and car payments - that can help demonstrate that you are responsible.  (C) Be reliable, stay within your affordable budget.  (D) All of the above.  (A) Only use your credit card when you know you can afford to use it.  (B) Establish other forms of credit - like a checking account, debit card and car payments - that can help demonstrate that you are responsible.  (C) Be reliable, stay within your affordable budget.  (D) All of the above. D

How can you maintain good credit?  (A) Pay at least the minimum payments of all your bills on time.  (B) Ask your parents to pay your bills for you.  (C) Use all your available credit on all accounts.  (D) All of the above.  (A) Pay at least the minimum payments of all your bills on time.  (B) Ask your parents to pay your bills for you.  (C) Use all your available credit on all accounts.  (D) All of the above. A

What is a credit report?  (A) A record of every purchase you've ever made with your credit card.  (B) A report indicating how many times you've applied for credit and been accepted or turned down.  (C) A record of how well you pay back your creditors and whether you pay your bills on time.  (D) All of the above.  (A) A record of every purchase you've ever made with your credit card.  (B) A report indicating how many times you've applied for credit and been accepted or turned down.  (C) A record of how well you pay back your creditors and whether you pay your bills on time.  (D) All of the above. C

Which of the following may request your credit report from a credit bureau?  (A) Insurance companies.  (B) Your employer.  (C) Your landlord.  (D) All of the above.  (A) Insurance companies.  (B) Your employer.  (C) Your landlord.  (D) All of the above. D

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The Four “ C s” of Credit CollateralCapitalCapacityCharacterCollateralCapitalCapacityCharacter

Sources of Credit  Banks  Credit Unions  Department Stores  Automobile Dealers  Oil Companies (for gas stations)  Federal Government (for student loans)  Payroll Lenders  Others???  Banks  Credit Unions  Department Stores  Automobile Dealers  Oil Companies (for gas stations)  Federal Government (for student loans)  Payroll Lenders  Others???

Types of Credit Installment Credit  Fixed payments  Set period of time to repay  Set or varying interest rates  Car loans and home loans are typical examples. Installment Credit  Fixed payments  Set period of time to repay  Set or varying interest rates  Car loans and home loans are typical examples. Revolving Credit  No stated payoff time  Limit to credit  Minimum monthly payments  Interest rates vary or not  Finance charges  Credit cards most typical example Revolving Credit  No stated payoff time  Limit to credit  Minimum monthly payments  Interest rates vary or not  Finance charges  Credit cards most typical example

Credit Card Types  Charge cards  Credit cards  General-purpose credit cards  Single or limited-purpose credit cards  Charge cards  Credit cards  General-purpose credit cards  Single or limited-purpose credit cards

 Premium cards  Affinity credit cards  Co-branded credit cards  Secured cards  Premium cards  Affinity credit cards  Co-branded credit cards  Secured cards  Stored-value or "smart" cards  Debit cards  ATM cards  Stored-value or "smart" cards  Debit cards  ATM cards More Cards, More Cards

The Fine Print  Charge cards - agreement to pay the full amount of the charges due each month, so there is no finance charge.  Credit cards - a revolving loan — or credit limit — based on the agreement to pay at least the minimum amount due on the amount of credit you use by the payment date. A finance charge is applied to the outstanding balance — the amount you do not pay by the due date.  Charge cards - agreement to pay the full amount of the charges due each month, so there is no finance charge.  Credit cards - a revolving loan — or credit limit — based on the agreement to pay at least the minimum amount due on the amount of credit you use by the payment date. A finance charge is applied to the outstanding balance — the amount you do not pay by the due date.

 General-purpose credit cards can be used to pay for just about anything, anywhere from clothes at department stores to meals at restaurants as well as to get cash advances.  Single or limited-purpose credit cards are credit cards that can be used only in a specific store or group of stores, or for a specific purpose.  General-purpose credit cards can be used to pay for just about anything, anywhere from clothes at department stores to meals at restaurants as well as to get cash advances.  Single or limited-purpose credit cards are credit cards that can be used only in a specific store or group of stores, or for a specific purpose.

 Premium cards such as Platinum or Gold Cards are charge or credit cards that offer additional benefits such as travel upgrades, special insurance or exclusive seating for concerts.  Affinity credit cards are associated with specific organizations and offered to people affiliated with those organizations.  Co-branded credit cards are co-sponsored by two companies and have benefits and rewards designed specifically for their joint customers.  Premium cards such as Platinum or Gold Cards are charge or credit cards that offer additional benefits such as travel upgrades, special insurance or exclusive seating for concerts.  Affinity credit cards are associated with specific organizations and offered to people affiliated with those organizations.  Co-branded credit cards are co-sponsored by two companies and have benefits and rewards designed specifically for their joint customers.

 Secured cards are credit cards guaranteed by a bank account or deposit made by the applicant.  Stored-value or "smart" cards look like credit cards but are actually prepaid cards.  Secured cards are credit cards guaranteed by a bank account or deposit made by the applicant.  Stored-value or "smart" cards look like credit cards but are actually prepaid cards.

Not Credit Cards -  ATM cards are used to get cash and complete other transactions at a bank machine or automatic teller machine (ATM).  Debit cards look like credit cards and can be used in many places where a credit card is used.  The difference between a credit card and a debit card is that a debit card accesses the money in your bank or investment account to pay for purchases.  ATM cards are used to get cash and complete other transactions at a bank machine or automatic teller machine (ATM).  Debit cards look like credit cards and can be used in many places where a credit card is used.  The difference between a credit card and a debit card is that a debit card accesses the money in your bank or investment account to pay for purchases.

+ Debit Cards - An advantage of a debit card is that you can't spend money you don't have — you don't create debt — because you aren't buying on credit; you are paying with funds in your bank or investment account. A disadvantage is that debit cards are not subject to many of the consumer legal rights that apply to credit cards regarding returns, resolution of errors, fraud or other issues.

How Credit Scores Are Determined  Your payment history  Information about how you make your payments on credit cards, store accounts, car loans, finance companies, mortgages  Accounts in collection or past due, and how long past due  Information in public records, such as bankruptcy, judgments, liens, wage attachments or child support  Your payment history  Information about how you make your payments on credit cards, store accounts, car loans, finance companies, mortgages  Accounts in collection or past due, and how long past due  Information in public records, such as bankruptcy, judgments, liens, wage attachments or child support

How Credit Scores Are Determined  Your overall debt  How much you owe on all your accounts  How much credit you have available to use  Your credit account history  When you opened and used each of your accounts  How recently you applied for new credit  Recent good credit history following past payment problems  Your overall debt  How much you owe on all your accounts  How much credit you have available to use  Your credit account history  When you opened and used each of your accounts  How recently you applied for new credit  Recent good credit history following past payment problems

How Credit Scores Are Determined  Types of Credit  The different types of credit accounts you have  The total number of accounts you have  How long you have held those accounts  Types of Credit  The different types of credit accounts you have  The total number of accounts you have  How long you have held those accounts

Get and Keep a Good Score  Make sure your credit report is accurate.  Pay all your bills on time.  Apply for credit only when you need it.  Lower the balances on all your credit accounts.  Pay off debt rather than moving it around.  Make sure your credit report is accurate.  Pay all your bills on time.  Apply for credit only when you need it.  Lower the balances on all your credit accounts.  Pay off debt rather than moving it around.

Protect Yourself Against Inaccurate Credit Reports  Get a copy of your free credit reports from all credit rating agencies.  Examine it thoroughly.  If you find something that is incorrect, ask the agency to investigate the information.  If that doesn’t resolve the issue, you can attach a short statement to your credit report.  Get a copy of your free credit reports from all credit rating agencies.  Examine it thoroughly.  If you find something that is incorrect, ask the agency to investigate the information.  If that doesn’t resolve the issue, you can attach a short statement to your credit report.

The Big 3 Credit Reporting Agencies  Experian  Equifax  TransUnion  Experian  Equifax  TransUnion By Federal Law you can request 1 free credit report each year

Rule of Thumb 70% Living Expenses 10% Pay Off Debt 20% Save or Invest

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