1. WED. March 29, 2017 TODAY’S AGENDA
OBJECTIVES
(81) Identify the elements of creditworthiness.
(84) Explain the importance of credit reports.
HOMEWORK
Checking Account Project past due
All Q3 late work is due no later than 4 PM this Friday, March 31st.
TODAY’S AGENDA
BRO Time Finish your “Calculating Credit” worksheet.
Creditworthiness PowerPoint + Notes. Reading a Credit Report.
Celebrity Calamity BYOT or sign out your school laptop – use link on VISION.
CLOSING TASK
Explain why you might use a credit card instead of a debit card (checking) to make a purchase. Provide an example.

2. Identify the elements of creditworthiness.
Process/Skill Questions
Why does a lender look at a consumer’s credit history to determine future creditworthiness?
How do interest rates correlate to creditworthiness?
How can a consumer or business establish credit?
What items can be used as collateral for a loan?
What factors are considered when assessing a consumer’s capacity to repay a loan?
Task 81

3. How do you get credit?
Creditworthiness is the measure of a person’s ability and willingness to repay credit on time.
In addition to reviewing credit history or a credit score, lenders also consider 3 C’s.

4. Creditworthiness Lenders want to know that you are worth the risk.
Capacity
Character
Collateral
Lenders want to know that you are worth the risk.
The 3 C’s include:
capacity: ability to repay
character: trustworthiness to pay
collateral: consumer’s available cash or assets (other than debts)
Past history (credit report) is the best indicator of creditworthiness. Someone with good credit has a record of paying bills and has a history of paying bills on time. Someone with bad credit has been inconsistent in paying bills, has paid bills late, and has abandoned debts or filed for bankruptcy.

5. Your Credit History Matters!
Buying a Home
Renting an Apartment
Getting Phone Service
Financing a Car
Getting Student Loans
Qualifying for Insurance

6. Reasons Credit is Denied
No (or little) credit history
Irresponsible use of credit
Too much outstanding credit high balance
Victim of fraud i.e., identity theft

7. Borrowers’ Responsibilities
Read & understand the credit contract.
Borrow only what you can repay.
Pay your debts promptly! Notify the creditor if you cannot meet payments on time.
Report lost or stolen credit cards.

8. Explain the importance of credit reports.
Process/Skill Questions
How can a consumer’s spending habits affect his/her credit report?
What can a consumer do about a bad credit score?
Who can obtain a credit report? Why?
How can a consumer build a good credit rating?
How can unfavorable data be removed from a consumer’s credit file?
What can a consumer do to correct incorrect data included in his/her credit file?
Task 84

9. Credit Reports: Purpose
Data Collection
Credit History
Employment
Protection against Identity Theft
Data Collection Track your personal, financial and employment information over time
Credit History Lenders examine your past behaviors to determine how you might handle credit with them in the future
Employment Some employers want to see that you have demonstrated responsibility in your personal and professional life.

10. Credit Reports: Content
Personal Information Name, Address, SSN, Date of Birth, Employment
Credit Accounts Type of Credit, Date Opened, Limit or Loan Amount, Current Balance, Payments
Credit Inquiries includes creditors from the past two years
Public Record / Collection Items includes bankruptcies, foreclosures, overdue debt collection, etc.

11. What is a credit score?
A credit score is a fast, objective measurement of credit risk.
Used as an alternative to reading the full credit report
FICO scores are used by 90% of top U.S. lenders.
Credit scores are calculated with software developed by Fair Issac and Company (FICO). Scores range from 300 to 850.
Excellent: 750+
Good: 700 – 750
Fair 600 – 700
Poor < 600

12. Annual Credit Reports Credit Bureaus You can… Equifax Experian
TransUnion
Request one free credit report per year from each credit bureau.
Protect yourself from identity theft!
FTC: Consumer Information
Annual Credit Report annualcreditreport.com

13. goo.gl/ FxXnbU
Post Sample Credit Report.pdf on VISION for students to answer the seven questions at the end of the note guide.
Read the SAMPLE CREDIT REPORT to answer the questions on your “creditworthiness” notes.