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Applying for Credit

Applying for Credit . Obtaining a Loan. How can you obtain loan? Financial Instructions are going to check your background? You must apply for credit? Credit Application. Your Creditworthiness. The Lending agency will hire a….. Credit Bureau-

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Applying for Credit

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  1. Applying for Credit

  2. Obtaining a Loan • How can you obtain loan? • Financial Instructions are going to check your background? • You must apply for credit? • Credit Application

  3. Your Creditworthiness • The Lending agency will hire a….. • Credit Bureau- • Investigates a person to determine the risk involved in lending money to that person. • Credit Check • Investigation of person’s income, current debt, personal life, and past history of borrowing and repaying debts

  4. Credit Score • Credit Bureau will issue you a score… • Credit Rating • Rating of the risk involved in lending money to a specific person • Scale from 300-850 • Above 720 is a great credit score • What factors should be looked at to determine your credit rating?

  5. Credit Scores

  6. Rating your Credit • Capacity to Pay • Employment Record • Previous Debt • Character • Persons reputation as a reliable and trustworthy person • May look at education background, criminal record, etc… • Collateral • Something of value that a borrower lets the lender claim if a loan is not repaid • Size of your capital or personal wealth

  7. Loans • Secured Loan • Loan that is backed up by collateral • What might someone use as collateral for a loan? • Unsecured Loan • Loan guaranteed only by a promise to repay it • dealing with a trusted customer • Young borrowers might need a cosigner • Cosigner • A person who signs a loan contract along with the borrower and promises to repay the loan if the borrower does not

  8. Your Responsibilities as a Borrower • PAY YOUR BILLS!!! • Collection agencies will be after you. • Bad Credit History • Hard to get credit in future? • Pay off high interest loans . • Pay More than minimum to pay off faster.

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