1. Credit, Credit Scores, and Investing

2. What is Credit?
Borrowing money to pay for something now while promising to pay it later

3. Credit Vocab Lender: person who loans the $
Borrower: receives the loaned $
Annual percentage rate (APR): annual interest rate on any unpaid balance (meaning, you have to pay for any balance you carry)

4. Credit Rating: evaluation of the likelihood of a borrower to default on a loan
Based on past payment history
Collateral: property/ car/ house/ other valuable item that a borrower pledges as security for a loan
Lender can seize collateral as payment

5. Credit vs. Debit CREDIT DEBIT Repayment Must pay back (borrowing $)
Pay directly from acct
Interest
Pay balance + add’l interest
Not borrowing = no interest
Credit History
Affects score
Does not affect score
Fraud
Better fraud protection
Not as protected
Budgeting
Can buy things you might not be able to afford
Only buy based on $ actually in your account

6. Key to Responsible Use of Credit:
Pay your bill IN FULL And ON TIME

7. Credit Scores
3-digit number representing how likely you are to pay back your debts
Helps banks measure how risky it is to loan you money
Credit score is checked when buying car/ house; when getting CC; sometimes for phone/ phone plan; applying for jobs

8. Checking Credit Scores
Score below 500: very poor
700+: excellent (680 score will usually qualify you for most loans)
Should check your credit report at least 1x per yr (can do this for free)

9.  /  of Credit