Unit 9: Financial, Economic, and Business Technology Competency 3: Select strategies to use in handling credit and managing debt.

What is Credit?  Credit is the privilege of borrowing money with the promise to pay it back later.

What is Credit?  Your first venture into a loan will most likely be through a credit card.  Using a credit card is really taking out a loan.  Credit-card companies and banks that issue credit cards are letting you borrow their money when you use their cards.

Credit History  Credit history is a complete record of your credit performance.  Building a credit history takes time and patience.  Something as simple as keeping a cell phone bill paid on time builds credit history.

Credit Records  Before you are granted credit, a creditor (whoever will grant you credit) will ask about your past credit performance.  Were your bills paid on time?  How much total credit did you receive?

Your Credit File  Everyone who uses credit has a credit file.  A credit bureau is a company that maintains credit files.

Credit Bureau  There are three major credit bureaus:  Equifax  Experion  TransUnion

Credit Report  A credit report is issued by a credit bureau and contains relevant information about a person’s credit history.  About all of your public information goes on your credit report.  Personal information  Current and previous employers  Failing to pay bills  Filing for bankruptcy

Advantages of Credit  Credit can provide emergency funds.  Builds a good credit history (if used responsibly).  A safe alternative to cash.  Gives you time to pay.

Disadvantages of Credit  Credit purchases may cost more than cash purchases. (finance charges).  Future income is tied up when credit is used.  Car payments  House payments  Buying on credit can lead to overspending.

Kinds of Credit  Open-Ended Credit (limit placed on amount borrowed)  Closed-End Credit (loan repaid in fixed payments)  Service Credit (service done and paid for later)  Layaway Plans (regular payments made on merchandise held in your name)

Getting Credit Started  Open a savings account  Open a checking account  Use Parents to get started  May need parents to co-sign  Get a small loan  Apply for a bank credit card