Credit: Buy Now, Pay Later Chapter 5. Credit  3 C’s of credit  Character, Capacity, Capital  Credit History-record of your prior credit purchases and.

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Presentation transcript:

Credit: Buy Now, Pay Later Chapter 5

Credit  3 C’s of credit  Character, Capacity, Capital  Credit History-record of your prior credit purchases and payments  Default-fail to pay a debt or other obligation  Cosigner-someone who agrees to pay your debt if you fail to pay

Credit  Capacity- is your ability to pay credit  Credit Application- a form that you will fill out in order to be considered for a loan  Capital- is the assets you have at your disposal

Credit Bureaus  Credit Bureau- is an organization that keeps track of credit that is extended to you and the payments you make  Credit Report- shows credit cards, car loans, mortgages, or any other type of credit that has been extended to you  Credit Score- the number that indicates how well you handle credit

Credit Cards  Credit Card- is a thin plastic card that contains information, person’s name and account number  Unsecured loan- you can borrow money or purchase goods or services by just signing your name  Collateral- property accepted as security of death

Credit Cards  Annual Percentage Rate (APR)- some cards have you pay an annual set fee  Revolving Credit-You must pay part of the charges with interest but you get a grace period on when you have to pay, days  Cash Advance- is a loan against the available credit on your card

Credit Cards  Available Credit – difference between your card’s credit limit and the amount of credit you have already used.

Bankruptcy  Bankruptcy- legal decision that a person, company, or organization is unable to pay debts owed  Chapter 7 Bankruptcy- (straight bankruptcy) eliminates most types of debts. Most turn your property over to be sold to pay your creditors.  Chapter 13 Bankruptcy-provides a payment plan, allowing payments to a trustee who will pay your creditors for you