Warm-up On your notes, respond to one of the following: Describe a time you borrowed something, but didn’t give it back in a timely manner, if at all. What were the consequences? Describe a time someone borrowed something from you, but didn’t give it back in a timely manner, if at all. What were the consequences?

Credit The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

How Credit Works Based on your credit score, your loan (credit) will be more or less expensive

Who gives you credit? Banks and Credit Unions

Who gives you credit? Consumer Finance Companies A company that loans money to people who often cannot get loans from banks

Who gives you credit? Consumer Finance Companies Specific companies might have their own finance company you can use to get a loan from

Who gives you credit? Consumer Finance Companies Problem: Often charge high interest rates

Who gives you credit? Credit Card Companies

Who gives you credit? Mortgage Lenders (homes) Auto-Finance Companies (cars) Furniture Stores (furniture)

Who gives you credit? Payday lenders (remember the documentary?) You use your next paycheck as collateral for the loan Often results in cycle of borrowing and massive debt

Who gives you credit? Pawn shops and Check cashing stores Problem: Will charge you very high interest rates!

Who gives you credit? Government College loans! Student loans are never forgiven, even if you declare bankruptcy

Who gives you credit? Family, friends

Who gives you credit? You can borrow from an insurance company against the value of your policy

Benefits of Credit Don’t have to carry cash

Benefits of Credit Easier to shop online

Benefits of Credit Good for emergencies

Benefits of Credit Needed a lot of times to rent cars/hotels

Types of Credit Credit Card

Types of Credit Student Loans

Types of Credit Real Estate Loans Mortgage (home loans)

Types of Credit Cash loans

Types of Credit Car loans

Types of Credit Advance pay loans

What affects your credit? To qualify for credit/loans: The 6 C’s

What affects your credit? The 6 C’s Character (integrity)

What affects your credit? The 6 C’s Capacity (you have the money to pay it off)

What affects your credit? The 6 C’s Collateral (you have assets they can take if you don’t pay off your debts)

What affects your credit? The 6 C’s Capital (your worth)

What affects your credit? The 6 C’s Conditions (what is your condition and what is the condition of the overall economy)

What affects your credit? The 6 C’s Credit History and Scores (have you paid off loans in the past without late payments, etc.)

What affects your credit? The 6 C’s Character (integrity) Capacity (you have the money to pay it off) Collateral (you have assets they can take if you don’t pay off your debts) Capital (your worth) Conditions (what is your condition and what is the condition of the overall economy) Credit History and Scores (have you paid off loans in the past without late payments, etc.)

How can you memorize the 6 C’s The Method of Loci

How can you memorize the 6 C’s The Method of Loci The six things you see going from H-Hall to New Gym Mr. Salvato’s room—character (integrity) Commons—capacity (ability to pay) School Store—collateral Library—capital (net worth) Guidance—conditions of you and economy New Gym—credit history and scores