HOW TO QUALIFY FOR CREDIT CH 10, 10.2 How to get credit.

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Presentation transcript:

HOW TO QUALIFY FOR CREDIT CH 10, 10.2 How to get credit

Credit Information References: help verify your credit record Helps company to decide if you are credit worthy Types of questions cover; what you earn, how long you work for your current er, property owned, other debts

The 5 C’s of Credit Character Capacity Capital Collateral Conditions

Character Honesty Willingness to pay Past reputation regarding debt Future predicted by the past

Capacity Ability to pay Look at income Must decide if granting credit is wise Sometimes, even if income is high, granting additional credit is unwise.

Capital Assets and your net worth Includes cash, investments, personal property and any items of value Lender wants to know you have enough capital to pay back the loan

Collateral Value of your possessions May be used to repay your loan

Conditions What is the current state of the economy (ie. High unemployment, recession)? Tries to establish security of your job and the company that employs you.

How Do They Figure Out MY Credit??? FICO (Fair Isaac COmpany) Scores come from 3 different agencies: Equifax, Trans Union, Experian

My credit con’td Score ranges from (the higher the better) Minimal difference between agencies

Things that can lower your credit score Applying for a lot of credit all at once Missing payments on bills Filing for bankruptcy Maxing out your credit card continuously Having a lot of accounts open

KEEP AN EYE ON YOUR SCORE Allows you to request a free credit report every 12 months from all 3 agencies.