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HOW TO QUALIFY FOR CREDIT CH 10, 10.2 How to get credit
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Credit Information References: help verify your credit record Helps company to decide if you are credit worthy Types of questions cover; what you earn, how long you work for your current er, property owned, other debts
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The 5 C’s of Credit Character Capacity Capital Collateral Conditions
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Character Honesty Willingness to pay Past reputation regarding debt Future predicted by the past
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Capacity Ability to pay Look at income Must decide if granting credit is wise Sometimes, even if income is high, granting additional credit is unwise.
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Capital Assets and your net worth Includes cash, investments, personal property and any items of value Lender wants to know you have enough capital to pay back the loan
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Collateral Value of your possessions May be used to repay your loan
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Conditions What is the current state of the economy (ie. High unemployment, recession)? Tries to establish security of your job and the company that employs you.
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How Do They Figure Out MY Credit??? FICO (Fair Isaac COmpany) Scores come from 3 different agencies: Equifax, Trans Union, Experian
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My credit con’td Score ranges from 300-850 (the higher the better) Minimal difference between agencies
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Things that can lower your credit score Applying for a lot of credit all at once Missing payments on bills Filing for bankruptcy Maxing out your credit card continuously Having a lot of accounts open
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KEEP AN EYE ON YOUR SCORE www.annualcreditreport.com Allows you to request a free credit report every 12 months from all 3 agencies.
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