 the ability to borrow money in return for the promise of REPAYMENT  Before using credit you should ask your self:  Is it a want or a need?  Do you have to borrow?  Can you afford the payments?

 Credit stabilizes the economy  Allows individuals and businesses to borrow money when income is temporarily limited  Credit promotes business growth  Credit expands production  Credit raises the standard of living

 Buying or Renting a house  Buying or Leasing a car  Getting a loan  Opening up an account for certain bills  Some companies require your SS Number and will do a credit check on you to make sure you can pay the bills and you do not have any outstanding charges.

 Income & Expenses  Lenders will look at what you earn and your regular expenses; such as rent, utilities, food, and other ongoing items. The amount left tells them whether you can afford to take on additional debt.  Assets  Do you have assets that can serve as collateral? Lenders will look for things like bank accounts, insurance, and valuable items such as a house, if you own one.  Credit History  How do you manage debt? If you have credit cards or have borrowed money before, you have a history that shows prospective lenders whether you are creditworthy by revealing details about the amount of debt you already have, how many credit cards you have, and whether you make payments on time.

 Open a savings and checking account in your name.  Demonstrates that you can handle money responsibly.  Apply for department store and gasoline credit cards  Easier to obtain than major credit cards  Only good at that location  Understand the Terms of the card  Have an income  Make payments ON TIME! NO LATE PAYMENTS  Get someone to Cosign for you  This will affect both of your credit scores.  Building credit takes time.

 Credit Bureaus - organizations that collect credit information on individual consumers.  Equifax, Experian, and TransUnion  Provide credit reports to potential lenders, employers, and others upon request.  Credit Report - shows every time you have applied for credit of any kind, whether you have paid your bills on time, if you have paid your credit cards in full every month or carried a balance, and if you paid late fees.  Also shows other public information such as: bankruptcies, court judgments, and inquires by potential employees or companies

 You can access a free credit report every 12 months.  When you apply for credit the potential creditor will evaluate your report and decide to extend credit or not.  Employers may use this information to determine employment.  Insurance companies may use this to determine insurance rates.  Fair Credit Reporting Act  Is a federal law that limits the sharing of your financial information only to firms that have legal purposes to evaluate this information.

 An evaluation of your credit history to assess your creditworthiness  Higher the score the better the interest rates on loans because there is less risk of you defaulting on the loan.  A good credit score can save thousands of dollars in finance costs and interest charges.  Credit scores are calculated based on a model created by Fair Isaac Corporation (FICO score)  Its between 300 and 850 higher the score the better the credit a person has.

 FICO ® Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories.

 Pay your bills on time  Keep credit card and other “revolving credit” balances low (less than 30% of credit limit)  Pay off debt rather than moving it around