Credit and Credit Cards

Credit and Credit Cards

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Good CreditBad CreditNo Credit

What Do You Know? What is a credit card?

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?

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?

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?

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?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?

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?

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?

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 “The Four “CCs” of s” of CreditCredit

The Four “The Four “CCs” of s” of CreditCredit

CollateralCollateralCapitalCapitalCapacityCapacityCharacterCharacter

CollateralCollateralCapitalCapitalCapacityCapacityCharacterCharacter

Sources of CreditSources of CreditSources of CreditSources of Credit BanksBanks Credit UnionsCredit Unions Department StoresDepartment Stores Automobile DealersAutomobile Dealers Oil Companies (for gas stations)Oil Companies (for gas stations) Federal Government (for student Federal Government (for student

loans)loans) Payroll LendersPayroll Lenders Others???Others???

BanksBanks Credit UnionsCredit Unions Department StoresDepartment Stores Automobile DealersAutomobile Dealers Oil Companies (for gas stations)Oil Companies (for gas stations) Federal Government (for student Federal Government (for student

loans)loans) Payroll LendersPayroll Lenders Others???Others???

Types of CreditTypes of CreditTypes of CreditTypes of CreditInstallment Installment

CreditCredit Fixed paymentsFixed payments Set period of Set period of

time to repaytime to repay Set or varying Set or varying

interest ratesinterest rates Car loans and Car loans and

home loans are home loans are typical examples.typical examples.

Installment Installment CreditCredit

Fixed paymentsFixed payments Set period of Set period of

time to repaytime to repay Set or varying Set or varying

interest ratesinterest rates Car loans and Car loans and

home loans are home loans are typical examples.typical examples.

Revolving Revolving CreditCredit

No stated payoff No stated payoff timetime

Limit to creditLimit to credit Minimum monthly Minimum monthly

paymentspayments Interest rates Interest rates

vary or notvary or not Finance chargesFinance charges Credit cards most Credit cards most

typical exampletypical example

Revolving Revolving CreditCredit

No stated payoff No stated payoff timetime

Limit to creditLimit to credit Minimum monthly Minimum monthly

paymentspayments Interest rates Interest rates

vary or notvary or not Finance chargesFinance charges Credit cards most Credit cards most

typical exampletypical example

Credit Card TypesCredit 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 PrintThe 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 -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 -+ 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.

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 How Credit Scores Are DeterminedDetermined

How Credit Scores Are How Credit Scores Are DeterminedDetermined

Your payment historyYour payment history Information about how you make Information about how you make

your payments on credit cards, store your payments on credit cards, store accounts, car loans, finance accounts, car loans, finance companies, mortgagescompanies, mortgages

Accounts in collection or past due, Accounts in collection or past due, and how long past dueand how long past due

Information in public records, such Information in public records, such as bankruptcy, judgments, liens, as bankruptcy, judgments, liens, wage attachments or child supportwage attachments or child support

Your payment historyYour payment history Information about how you make Information about how you make

your payments on credit cards, store your payments on credit cards, store accounts, car loans, finance accounts, car loans, finance companies, mortgagescompanies, mortgages

Accounts in collection or past due, Accounts in collection or past due, and how long past dueand how long past due

Information in public records, such Information in public records, such as bankruptcy, judgments, liens, as bankruptcy, judgments, liens, wage attachments or child supportwage attachments or child support

How Credit Scores Are How Credit Scores Are DeterminedDetermined

How Credit Scores Are How Credit Scores Are DeterminedDetermined

Your overall debtYour overall debt How much you owe on all your How much you owe on all your

accountsaccounts How much credit you have available How much credit you have available

to useto use Your credit account historyYour credit account history

When you opened and used each of When you opened and used each of your accountsyour accounts

How recently you applied for new How recently you applied for new creditcredit

Recent good credit history following Recent good credit history following past payment problemspast payment problems

Your overall debtYour overall debt How much you owe on all your How much you owe on all your

accountsaccounts How much credit you have available How much credit you have available

to useto use Your credit account historyYour credit account history

When you opened and used each of When you opened and used each of your accountsyour accounts

How recently you applied for new How recently you applied for new creditcredit

Recent good credit history following Recent good credit history following past payment problemspast payment problems

How Credit Scores Are How Credit Scores Are DeterminedDetermined

How Credit Scores Are How Credit Scores Are DeterminedDetermined

Types of Credit Types of Credit The different types of credit The different types of credit

accounts you haveaccounts you have The total number of accounts you The total number of accounts you

havehave How long you have held those How long you have held those

accountsaccounts

Types of Credit Types of Credit The different types of credit The different types of credit

accounts you haveaccounts you have The total number of accounts you The total number of accounts you

havehave How long you have held those How long you have held those

accountsaccounts

Get and Keep a Good Get and Keep a Good ScoreScore

Get and Keep a Good Get and Keep a Good ScoreScore

Make sure your credit report is Make sure your credit report is accurate.accurate.

Pay all your bills on time.Pay all your bills on time. Apply for credit only when you Apply for credit only when you

need it.need it. Lower the balances on all your Lower the balances on all your

credit accounts.credit accounts. Pay off debt rather than moving it Pay off debt rather than moving it

around.around.

Make sure your credit report is Make sure your credit report is accurate.accurate.

Pay all your bills on time.Pay all your bills on time. Apply for credit only when you Apply for credit only when you

need it.need it. Lower the balances on all your Lower the balances on all your

credit accounts.credit accounts. Pay off debt rather than moving it Pay off debt rather than moving it

around.around.

Protect Yourself Against Protect Yourself Against Inaccurate Credit Inaccurate Credit

ReportsReports

Protect Yourself Against Protect Yourself Against Inaccurate Credit Inaccurate Credit

ReportsReports Get a copy of your free credit reports Get a copy of your free credit reports

from all credit rating agencies.from all credit rating agencies. Examine it thoroughly.Examine it thoroughly. If you find something that is If you find something that is

incorrect, ask the agency to incorrect, ask the agency to investigate the information.investigate the information.

If that doesn’t resolve the issue, you If that doesn’t resolve the issue, you can attach a short statement to your can attach a short statement to your credit credit report.report.

Get a copy of your free credit reports Get a copy of your free credit reports from all credit rating agencies.from all credit rating agencies.

Examine it thoroughly.Examine it thoroughly. If you find something that is If you find something that is

incorrect, ask the agency to incorrect, ask the agency to investigate the information.investigate the information.

If that doesn’t resolve the issue, you If that doesn’t resolve the issue, you can attach a short statement to your can attach a short statement to your credit credit report.report.

The Big 3 Credit Reporting Agencies

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 ThumbRule of ThumbRule of ThumbRule of Thumb

70%70%Living ExpensesLiving Expenses

10%10%Pay Pay Off Off

DebtDebt

20%20%Save or InvestSave or Invest

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