2. Keys to Credit

3. What is Credit? Buy now – pay later Financial tool Binding contract Buy now – pay later Financial tool Binding contract

4. Advantages of Using Credit Establish credit history Use of item now Safety Take advantage of bargains Convenience Emergency funds Consolidate bills Spending record Establish credit history Use of item now Safety Take advantage of bargains Convenience Emergency funds Consolidate bills Spending record

5. Disadvantages of Using Credit Tend to overspend Credit history damaged if misused Fees Interest (APR) Commits future income Tend to overspend Credit history damaged if misused Fees Interest (APR) Commits future income

6. Ways to Minimize Credit Costs Shop for the lowest APR Borrow only amount really needed Pay more than minimum monthly Shop for the lowest APR Borrow only amount really needed Pay more than minimum monthly

7. Ways to Minimize Credit Costs Pay cash whenever possible Take out a loan for the shortest time possible Pay bills on time Pay cash whenever possible Take out a loan for the shortest time possible Pay bills on time

8. The 3 Cs of Credit Character Capital Capacity Character Capital Capacity

9. Types of Credit Installment credit Non-Installment credit Installment credit Non-Installment credit

10. Paycheck Loans Borrow money against your future paycheck Always a loan fee Interest is very high Borrow money against your future paycheck Always a loan fee Interest is very high

11. Information on Credit Reports Identification & employment data Payment history Inquiries Public record information Identification & employment data Payment history Inquiries Public record information

12. Sample Credit Report

13. Credit reports used by: Banks Landlords Car dealers Insurance companies Retail stores Employers Banks Landlords Car dealers Insurance companies Retail stores Employers

14. Major Credit Reporting Agencies Equifax Experian Trans Union Offer free report every 12 months www.annualcreditreport.com Equifax Experian Trans Union Offer free report every 12 months www.annualcreditreport.com

15. FICO Scores

16. Sample Credit Report

19. If there are mistakes… Write CRA Explain error Include copies of documents CRA must check into Write CRA Explain error Include copies of documents CRA must check into

20. Building a Credit Rating Open checking & savings account Apply for credit with your bank Buy something on time from a store Apply for a gas card Get a co-signer Open checking & savings account Apply for credit with your bank Buy something on time from a store Apply for a gas card Get a co-signer

21. Most Important!!! Pay your bills on time

22. Misuse of credit can: Ruin credit history & chances of qualifying for future credit Make it hard to find a place to live or get a job Result in bankruptcy Ruin credit history & chances of qualifying for future credit Make it hard to find a place to live or get a job Result in bankruptcy