1. credit
Chapter 25

2. Credit Objectives:
Define credit and indicate three factors that affect the interest
Name different groups in our economy that use credit
Identify three advantages and disadvantages of using credit
Name places where you can get credit and list the three different types of credit cards

3. What is credit? A promise Buy now—pay later. A contract between
Vocabulary: Credit, Creditor, Debtor,

4. Credit Serves four (4) functions in our economy
Stabilizes the economy allowing for purchases (Buy now and pay later)
Promotes Business Growth – allows for new businesses to form
Expands Production – business can purchase new capital
Raises the standard of living – as a consumer you have more assets because of credit

5. IMPORTANCE OF CREDIT (Why do you need credit?)
Car loan, mortgage, student loan etc.
Utilities
Insurance
Renting

6. PROS and CONS Advantages Convenient Establishes credit history
Emergencies
Risks with carrying cash
Purchasing online
Helps economy grow

7. DISADVANTAGES Costs are attached to using credit
Misuse – many people are not disciplined when using credit
May lead to a Lower credit rating if you can not stop spending
Credit Fraud
TOO MUCH DEBT!!!!!

8. Factors to Consider Before Using Credit
Is a Down Payment required?
Can I use Savings?
Can I really afford it?
Use credit now?
Or Wait to buy later
What are the Costs involved?

9. Sources of Credit Credit Cards Single-Purpose Cards (Revolving)
Examples:
Multipurpose Cards (Revolving)
Examples
Travel and Entertainment (Regular)
Revolving
Unsecured – not guaranteed by other property or cash
Higher Rates
Secured – where property or cash is pledged for an asset
Collateral

10. Banks offer Credit Single-Payment Loan (seasonal businesses)
Installment Loan –
When would I use…
Mortgage Loan
Purchase a Home

11. Other Sources of Credit
Seller-Provided Credit
Buying Furniture
Examples:
Consumer Finance Companies
For People who have _______
Payday Advance Services
Used to cash checks & get loans
Pawnshops

13. Chapter 26 – How to Get and Keep Credit
What I need to know…

14. Developing a Credit History
Without a History
Banks will not loan you money and/or
You will pay very high interest rates
Ways to begin developing a Credit History
Open a Checking and Savings Account
Get a Debit Card
Apply for a Secured Credit Card
Charge Small balances and pay bill in full each month
NOTE: IF YOU HANDLE THE ABOUT RESPONSIBLY THEN…

15. Developing a Credit History
You will have a good chance of getting a car loan, mortgage or a personal loan
BEFORE APPLYING FOR A LOAN
Check your Credit Report – fix discrepancies
Bring the following when applying for a loan:
PROOF OF INCOME: Pay stubs, tax reports, bank statements, or any other proof of income
PROOF OF IDENTITY: Social Security Number and Driver’s License
If they feel you are not credit worthy you may need a Cosigner