Disclaimer: The views expressed are those of the presenter and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

Why people get in trouble with Debt Unemployment, medical bills, or divorce Could not control spending, did not plan for the future and did not save money Lacked knowledge of financial and credit matters

Speaking of Interest When you take out a loan, you repay the principal, which is the amount borrowed, plus interest, the amount charged for lending you money. BOTTOM LINE: Those who know about interest, earn it; those who don’t, pay it

Analyze debt and develop a strategy Shop and negotiate for the lowest rate on loans Save interest expense by paying off loans earlier or choosing shorter terms

Avoid Credit Card Debt Pay cash Pay bills on time Set a monthly limit on charging Limit the number of cards you have Choose cards with lowest rates and no annual fee Don’t apply in order to get a free gift Steer clear of blank checks companies send you Pay bills on time

Credit Report Shows all your payment history, plus late payments A credit score predicts the likelihood that you will repay on time Credit scores range from 500-800+ and are determined by payment history, debt and length of credit history Factors not considered include age, race or ethnicity, income, job, marital status, education, address or whether you own/rent

Components of Your Credit Score

Credit Scores

Too deep in debt… Discuss options with creditors before missing a payment Seek expert help such as local Consumer Credit Counseling Services Avoid “credit repair” companies that charge a fee