1. Credit

2. Questions to Consider What is credit? Does credit cost?
What are the advantages of using credit?
What happens if I misuse credit?

3. Credit
A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest.
Also refers to the borrowing capacity of an individual or company.

4. Credit Report
NPR- Credit Reporters
A credit report is a detailed report of an individual's credit history. Credit bureaus collect information and create credit reports based on that information, and lenders use the reports along with other details to determine loan applicants' credit worthiness.

5. Credit Score
Your credit score is a numerical summary of the information contained in your credit report.
Credit scores typically range from 300 to 850 with higher credit scores being better.

6. Interest
Interest- fee charged by a lender to a borrower for the use of borrowed money.
usually expressed as annual percentage of the principal (APR)
rate depends on the credit risk of the borrower, & the inflation rate.
Principal- the amount borrowed
The lower the rate, the less you have to pay back on your borrowed money.

7. Credit scores
Low credit scores will cost individuals more money long-term.
This table is based upon a thirty-year fixed mortgage rate on a $300,000 loan.
FICO Score
Interest Rate
Monthly Payment
30 Year Amount
760
5.9%
$1,787
$643,320
650
7.2%
$2,047
$736,920
590
9.3%
$2,500
$900,000

8. Interest $2,000 18% $50.00 62 months $1,077.25 $3,077.25 10% 49 months
Amount charged to credit card
APR
Minimum Payment
Time to pay off the credit card
Total amount of interest paid
Total paid for credit card balance
$2,000
18%
$50.00
62 months
$1,077.25
$3,077.25
10%
49 months
$443.00
$2,443.00
$75.00
35 months
$573.00
$2,573.00

9. Why does your credit score matter?
Credit checks are required for mortgage, auto and credit loan approvals.
Employers may also run credit checks as part of the hiring or promotion process.
Landlords will use credit reports to determine your ability to pay rent.
If you have bad credit it is very difficult to live your life the way you want to.

10. Tips for Building GOOD credit
Disclosure- I am in NO WAY SHAPE OR FORM TELLING YOU TO OPEN UP A CREDIT CARD ACCOUNT AT 15/16/17/18 years old.
Open a bank account and use it responsibly.
Avoid over-drafting your account = charging more than you actually have in your account. Most banks fine you $35.
Only charge what you can PAY IN FULL.
Use it once a month for SMALL things.
Try not to charge more than 30% of your limit. It hurts your credit score
Limit= the amount that the lender is willing to let you borrow

11. Pay all of your bills on time, EVERYTIME.
Can significantly damage your credit
Avoid opening too many accounts
Check your credit score every 6 months to see where you are.
You are entitled to a free credit report from each of the credit bureaus once a year (Equifax, Experian, Transunion)

12. BE VERY CAREFUL WITH CREDIT CARDS
BE VERY CAREFUL WITH CREDIT CARDS. PEOPLE ARE MUCH MORE LIKELY TO SPEND MORE WHEN THEY ARE USING THEIR CC THAN WHEN THEY ARE USING CASH OR A DEBIT CARD.
Also only paying the minimum payment on your card will result in horrible, terrible, awful unwanted interest and will take you forever to pay off your card and get out of debt. CNN Debt Planner

13. Safety tips Sign card with a signature and “Please See ID”
Do not leave cards lying around
Close unused accounts in writing and by phone, then cut up the card
Do not give out account numbers unless making purchases
Keep a list of all cards, account numbers, and phone lists separate from cards
Report lost or stolen cards promptly