1. Understanding Credit & Credit Scores

2. How we make purchases… Checking accounts Savings accounts
Money you deposit to your bank… withdrawn through checks, ATM, debit cards
Savings accounts
Money deposited to your bank, left to gain interest
Lines of credit
Credit cards… specific limit based on credit score. From banks, stores, lending companies
Loans
Large purchases… homes, cars, tuition… one payment, monthly amount due (fixed)

4. Using Credit Wisely Costs of Using Credit: Pay monthly balance on time
Use credit cards sparingly, stay within limit
Check credit report regularly
Risks of Credit:
Interest rates
Identity Theft
Debt
Overspending
Costs of Using Credit:
Finance charges
Interest
Late fees
Closing costs

5. Paying off Debt $2,000.00 9 yrs & 9 mo $1,774.96 $3774.96, $6,000.00
Scenario:
Interest Rate: 24%
Minimum Payment: 4% of balance
Balance
Time to Pay Off
Interest Charged
Total Pay
$2,000.00
9 yrs & 9 mo
$1,774.96
$ ,
$6,000.00
14 yrs & 4 mo
$5,775.08
$11,775.08
$10,000.00
16 yrs & 5 mo
$9,774.89
$19,774.89

6. Credit Scores Credit rating ranges from 200-850
A “good credit rating” is at least 700+
Based on amount owed, payment history, number of loans/credit
Businesses report missed payments, overcharges, etc
Banks/lenders use this to determine whether to loan you money or not!
Today many employers run a credit report when hiring.

8. Identity Theft
15 Million people have their identity stolen every year!
How to avoid identity theft:
Average of $3,500 lost
Shred important documents
Often require lengthy process, criminal investigation to return $ (if possible)
Limit online purchases
Pay attention to bills/statements
Online records databases (business & government) hacked
Check credit score
Complex passwords
Secure your SS#
Avoid opening unnecessary accounts

9. Other Scams & Schemes Rent to own Credit repair scheme
College financial aid scam
Pay day loan
Loan scam
Pyramid scheme

10. Creating a Budget What is a budget? Why do you need one?
Plan for how you spend/save your money
Why do you need one?
Financial success/independence, responsibilities, accomplishment
Income v. Expenses
Paychecks, child support, part time employment, parents
Expenses change…. Fixed, Variable (Flexible)

11. Budget Process 1. determine your income 2. estimate your expenses
3. cope with changes/Plan for goals
4. balance your budget (compare income/expense)
5. Review your budget and make changes