1. Credit Records and Laws Chapter 17

2. Goals for Chapter 17.1 Discuss the importance of credit records and summarize how and why records are compiled. Discuss the importance of credit records and summarize how and why records are compiled. Describe the five Cs of credit. Describe the five Cs of credit. Explain how to get started using credit. Explain how to get started using credit.

3. Your Credit File Your credit history is the complete record of your borrowing and repayment performance. Your credit history is the complete record of your borrowing and repayment performance. Your credit history is on file at a credit bureau, a company that gathers, stores, and sells credit information to business subscribers. Your credit history is on file at a credit bureau, a company that gathers, stores, and sells credit information to business subscribers.

4. Credit bureaus issue credit reports about consumers. Credit bureaus issue credit reports about consumers. A credit report is a written statement of a consumer’s credit history. A credit report is a written statement of a consumer’s credit history.

5. How Information is Gathered and Used Credit bureaus gather information from businesses, called subscribers, who pay a monthly fee to the credit bureau. Credit bureaus gather information from businesses, called subscribers, who pay a monthly fee to the credit bureau.

6. Types of Information Stored Any public information becomes part of your credit record. Any public information becomes part of your credit record. Failure to pay taxes Failure to pay taxes Bankruptcy Bankruptcy Divorce Divorce Marriage Marriage Lawsuits Lawsuits Promotions Promotions Occupation Occupation

7. Creditworthiness 5 C’s of credit 5 C’s of credit Character is a responsible attitude toward living up to agreements. Character is a responsible attitude toward living up to agreements. The financial ability to repay a loan with present income is known as capacity. The financial ability to repay a loan with present income is known as capacity. Capital: Is the creditor fully protected if you fail to repay? Capital: Is the creditor fully protected if you fail to repay? Conditions: What general economic conditions can affect your repayment of debt? Conditions: What general economic conditions can affect your repayment of debt? Collateral: What assets back up your promise to pay? Collateral: What assets back up your promise to pay?

8. Getting Started with Credit Open a savings account. Open a savings account. Open a checking account. Open a checking account. Open a store credit account Open a store credit account Get a small loan. Get a small loan. Apply for a credit card. Apply for a credit card.

9. Goals for Chapter 17.2 Describe credit ratings and a point system for determining creditworthiness. Describe credit ratings and a point system for determining creditworthiness. Outline the contents of a credit report. Outline the contents of a credit report. Discuss the protections provided by the major credit laws. Discuss the protections provided by the major credit laws.

10. Credit Ratings Credit bureaus give each consumer a credit rating, which is a measure of creditworthiness based on an analysis of the consumer’s financial history. Credit bureaus give each consumer a credit rating, which is a measure of creditworthiness based on an analysis of the consumer’s financial history.

11. To earn an excellent credit rating, a customer must pay bills before they are due. You must also have well established credit. To earn an excellent credit rating, a customer must pay bills before they are due. You must also have well established credit. To earn a good credit rating, you must pay bills on the due date or within a ten-day grace period. To earn a good credit rating, you must pay bills on the due date or within a ten-day grace period. A fair credit rating is earned by a customer who usually pays all bills within the grace period, but occasionally takes longer. A fair credit rating is earned by a customer who usually pays all bills within the grace period, but occasionally takes longer. People with a poor credit rating are usually denied credit because their payments are not regular. People with a poor credit rating are usually denied credit because their payments are not regular.

12. Credit Reports (see example) Summary of information Summary of information Public Record Information Public Record Information Credit Information Credit Information Account Detail Account Detail Requests for Credit History Requests for Credit History Personal Information Personal Information

13. Credit Laws Consumer Credit Protection Act Consumer Credit Protection Act Consumers must be fully informed about the cost of a credit purchase. Consumers must be fully informed about the cost of a credit purchase. Fair Credit Reporting Act Fair Credit Reporting Act If you are denied credit, you are entitled to a free credit report within 30 days. If you are denied credit, you are entitled to a free credit report within 30 days. Fair Credit Opportunity Act Fair Credit Opportunity Act Designed to prevent discrimination. Designed to prevent discrimination.

14. Fair Debt Collection Practices Act Fair Debt Collection Practices Act Designed to eliminate abusive collection practices by debt collectors. Designed to eliminate abusive collection practices by debt collectors.