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Keys to Credit

Keys to Credit. What is Credit?. Buy now – pay later Financial tool Binding contract . Advantages of Using Credit . Establish credit history Use of item now Safety Take advantage of bargains Convenience Emergency funds Consolidate bills Spending record.

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Keys to Credit

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  1. Keys to Credit

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

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

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

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

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

  7. The 3 C’s of Credit • Character • Capital • Capacity

  8. Types of Credit • Installment credit • Non-Installment credit

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

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

  11. Sample Credit Report

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

  13. Major Credit Reporting Agencies • Equifax • Experian • Trans Union Offer free report every 12 monthswww.annualcreditreport.com

  14. FICO Scores

  15. Sample Credit Report

  16. Sample Credit Report

  17. Sample Credit Report

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

  19. 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

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

  21. 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

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