1. Credit

2. The reputation one has built in his or her dependability in regard to paying back borrowed money

3. 50 year old person who has bought several cars, two houses, and other items with millions of borrowed dollars never having missed a payment will have good credit

4. Creditors, or people lending money, would be more than willing to lend him money

5. On the other hand, someone who has a credit history of paying late or not paying at all will have difficulty borrowing money
To what sort of person would you be willing to lend money?

6. Banks and other creditors use the services of credit agencies to decide whether or not to lend someone money

7. These agencies keep track of people’s tendency to pay back borrowed money
If people do not pay on their debt, the creditor will report them to the credit agencies

8. When those people go to borrow again, they might be turned down
This credit history follows us for seven years

9. When considering someone’s credit health, financial institutions consider four aspects of an individual. These are known as the 4 C’s

10. 4 C’s
Credit History- when money was borrowed in the past, how faithfully was it paid back?
Character- Does the person have a criminal past?

11. Capacity to Pay- What is the person’s monthly income and can he or she handle a monthly payment schedule?
Capital- How much does the person have in the bank? Or does the person have capital resources that could be considered collateral (objects that can be handed over to the bank in the event the person doesn’t pay the loan)?

12. Many people today borrow more money than they can afford to pay back
A major reason for this is credit cards

13. Credit cards- money is lent at high interest rates- usually between 15 to 20% for people just starting out
Credit cards are issued through and managed by banks

14. They work through massive computer systems by companies like Mastercard or Visa
While credit cards do afford holders a certain amount of financial freedom, they often get people into trouble

15. Credit Cards Apply for at least one in college
Use as a convenience, pay it off each month
Charge at least one thing each month
Only get one to three cards

16. Credit Cards Credit card should not have an annual fee
Should get a card with some type of reward
Cash back is best
Gas
Airline miles (takes a long time, difficult to use before expire)

17. Credit Cards Steer clear of store credit cards
They have high interest rates
People end up having multiple cards all of a sudden

18. You are entitled to one free credit report a year
Get one and look at it
3 main credit bureaus:
Trans Union
Equifax
Experian

19. Keep same credit card for as long as possible- do not keep closing and opening new ones
Length of history is one criterion to be judged by

20. Credit Scores:
FICO (Fair Isaac Corporation)
Range typically between
660 borderline sub-prime (high risk)
Vantage Score started Spring scores are

21. FICO Factors 35% punctuality of payments in the past
30% capacity used (maxed out?)
15% length of credit history
10% type of credit used (installment, revolving, etc.)
10% recent applications for credit/ recent credit obtained

22. http://www. bankrate. com/brm/news/debt/debtmanageguide/going-higher2