1. Credit in our Economy Chapter 32: Credit Records and Regulations

2. In This Chapter You Will Be Able To : Discuss credit applications, credit bureaus, and credit reports. Explain what should be done in checking credit records. Explain what can be done to build and keep a good credit history.

3. Chapter 32: Creditworthiness Day 1 Notes

4. What is creditworthiness? Lenders want to be assured of two things: – Ability to repay a debt. – Willingness to do so. Creditworthy—having established a credit record that shows you are a good credit risk. – Credit record—a report that shows the debts you owe, how often you use credit, and whether you pay your debts on time. Lenders also want to find out about: – Finances. Examples – salary, investments, savings – Other sources of income. Example – child support – Reliability. Examples – occupation, present employer, etc.

5. What is a credit application? Credit application—a form on which you provide information needed by a lender to make a decision about granting credit or approving a loan. – The credit application needs to be filled out completely, accurately, and honestly. – One of the most important parts of the application is filling out your credit references.

6. Who reports credit information? Information on credit applications will be verified to assure its accuracy. Credit bureau—a company that gathers information on credit users and sells that information in the form of credit reports to credit grantors. – Credit bureaus keep records of consumers’ debts but can record only information that is officially reported to them. – Credit bureaus do not make value judgments; they simply gather the facts that are reported to them. – Your credit report is confidential and can only be obtained by those with a legitimate reason to examine it.

7. Chapter 32: Credit Records Day 2 Notes

8. What are credit records? Statement of account (statement)—a record of the transactions that you have completed with a business during a billing period. – Statements show: balance due amounts charged during the month amounts credited to your account current balance minimum amount of your next payment Credit memorandum—a written record of the amount subtracted from an account when merchandise has been returned.

9. Why is it important to keep accurate records? To avoid credit record problems, you should keep your own records. When you receive the credit card statement, you should examine it for accuracy and make sure that it is correct. Always keep your statements in case of any questions in the future. Receipt—a written form that acknowledges payment was made. – It is recommended that you keep your monthly receipts to compare to your monthly credit card statement.

10. Chapter 32: Your Rights and Your Credit History Day 3 Notes

11. What are your rights? Federal and state governments have passed laws to protect consumer’s credit transactions. – Truth-in-Lending Law—a law that requires that you be told the cost of a credit purchase in writing before you sign a credit agreement. Also, it protects against unauthorized use of credit cards. You are not liable for fraudulent charges made on your credit card. – Equal Credit Opportunity Act—an act that prohibits creditors from denying credit because of age, race, sex, or marital status. Any person that is denied credit must be given a written statement as to why they were denied.

12. What are your rights? – Fair Credit Billing Act—a law that requires prompt correction of billing mistakes when they are brought to the attention of a business in a prescribed manner. After you report the error: – While waiting for an answer, you are not required to pay any amount in question. – Your complaint must be acknowledged by the creditor within 30 days unless your statement is corrected before that time. – You do not pay finance charges on any amount in error. – Fair Credit Reporting Act—a law that gives consumers the right to know what specific information credit bureaus are providing to potential creditors, employers, and insurers.

13. What are things you can do now to help build your credit record? It is good to have a checking and savings account, so that a lender can see that you can handle money. Having an employment record also helps to establish a good credit record. Have a credit card, use it for small purchases and pay your entire balance each month.

14. What are your sources of help when you have difficulty paying your bills? If you cannot pay your bills: – Contact your creditors and explain your situation. – Make a realistic proposal for when and what you can pay. – Honor any financial agreement that you make with the creditor. Debt repayment plan—an agreement developed cooperatively by a creditor and debtor to reduce payments to a more manageable level and still pay off the debt. Watch for fraudulent scams, such as advertisements telling you that you can erase all debts and bad credit.