1. GOING INTO DEBT CHAPTER 4 SECTION 1

3. WHAT IS CREDIT? CREDIT IS THE RECEIVING OF FUNDS EITHER DIRECTLY OR INDIRECTLY TO BUY GOODS AND SERVICES TODAY WITH THE PROMISE TO PAY FOR THEM IN THE FUTURE. CREDIT IS THE RECEIVING OF FUNDS EITHER DIRECTLY OR INDIRECTLY TO BUY GOODS AND SERVICES TODAY WITH THE PROMISE TO PAY FOR THEM IN THE FUTURE.

4. THE COST OF USING CREDIT PRINCIPAL IS THE AMOUNT ORIGINALLY BORROWED. PRINCIPAL IS THE AMOUNT ORIGINALLY BORROWED. INTEREST IS THE AMOUNT THE BORROWER MUST PAY FOR THE USE OF SOMEONE ELSE’S MONEY. INTEREST IS THE AMOUNT THE BORROWER MUST PAY FOR THE USE OF SOMEONE ELSE’S MONEY.

5. COMMON TYPES OF CREDIT CREDIT CARD: CREDIT CARD: BANKS, CREDIT UNIONS, STORES,... BANKS, CREDIT UNIONS, STORES,... NO PAYOFF DEADLINE NO PAYOFF DEADLINE MONTHLY MINIMUM PAYMENTS VARY, BASED ON BALANCE MONTHLY MINIMUM PAYMENTS VARY, BASED ON BALANCE USUALLY HAS HIGHEST RATE USUALLY HAS HIGHEST RATE

6. COMMON TYPES OF CREDIT INSTALLMENT LOAN: INSTALLMENT LOAN: BANKS, CREDIT UNIONS, AUTO DEALERS,... BANKS, CREDIT UNIONS, AUTO DEALERS,... INTEREST RATES ARE USUALLY LOWER THAN CREDIT CARDS. INTEREST RATES ARE USUALLY LOWER THAN CREDIT CARDS. CONSUMERS REPAY THIS TYPE OF LOAN WITH EQUAL PAYMENTS, OR INSTALLMENTS, OVER A PERIOD OF TIME. CONSUMERS REPAY THIS TYPE OF LOAN WITH EQUAL PAYMENTS, OR INSTALLMENTS, OVER A PERIOD OF TIME. NEED TO CONSIDER THE LENGTH OF THE LOAN. NEED TO CONSIDER THE LENGTH OF THE LOAN.

7. INSTALLMENT DEBT FOR EXAMPLE: AN AUTO LOAN FOR EXAMPLE: AN AUTO LOAN BORROW $10,000 BORROW $10,000 9% INTEREST RATE 9% INTEREST RATE 48 MONTHS 48 MONTHS YOUR MONTHLY PAYMENT IS $249 YOUR MONTHLY PAYMENT IS $249 AT THE END OF THE FOUR YEARS, YOU WILL HAVE PAID THE LENDER ABOUT $11,950 AT THE END OF THE FOUR YEARS, YOU WILL HAVE PAID THE LENDER ABOUT $11,950 BORROWING INCREASED THE COST OF THE CAR 20%. BORROWING INCREASED THE COST OF THE CAR 20%.

8. COMMON TYPES OF CREDIT STUDENT LOAN: STUDENT LOAN: BANKS, CREDIT UNIONS, AND FEDERAL GOVERNMENT BANKS, CREDIT UNIONS, AND FEDERAL GOVERNMENT USED FOR TUITION AND OTHER COLLEGE EXPENSES USED FOR TUITION AND OTHER COLLEGE EXPENSES CAN DELAY PAYMENTS UNTIL AFTER GRADUATION CAN DELAY PAYMENTS UNTIL AFTER GRADUATION USUALLY LOWER INTEREST RATE THAN INSTALLMENT LOAN USUALLY LOWER INTEREST RATE THAN INSTALLMENT LOAN INCOME TAX BREAK INCOME TAX BREAK

9. COMMON TYPES OF CREDIT MORTGAGE: MORTGAGE: BANKS AND CREDIT UNIONS BANKS AND CREDIT UNIONS SPECIFICALLY FOR A LOAN TO PURCHASE A HOME SPECIFICALLY FOR A LOAN TO PURCHASE A HOME MONTHLY PAYMENTS USUALLY SET FOR LIFE OF LOAN MONTHLY PAYMENTS USUALLY SET FOR LIFE OF LOAN USUALLY LOWER INTEREST RATE THAN INSTALLMENT LOAN USUALLY LOWER INTEREST RATE THAN INSTALLMENT LOAN INCOME TAX BREAK INCOME TAX BREAK

10. THE COST OF USING CREDIT ANNUAL PERCENTAGE RATES (APR) ANNUAL PERCENTAGE RATES (APR) THE AMOUNT IT COSTS YOU A YEAR TO USE CREDIT, EXPRESSED AS A PERCENTAGE RATE. IT INCLUDES INTEREST, TRANSACTION FEES, AND SERVICE CHARGES. THE AMOUNT IT COSTS YOU A YEAR TO USE CREDIT, EXPRESSED AS A PERCENTAGE RATE. IT INCLUDES INTEREST, TRANSACTION FEES, AND SERVICE CHARGES. ANNUAL FEE ANNUAL FEE A YEARLY CHARGE FOR THE PRIVILEGE OF USING CREDIT. MOST OFTEN USED BY CREDIT CARD COMPANIES. A YEARLY CHARGE FOR THE PRIVILEGE OF USING CREDIT. MOST OFTEN USED BY CREDIT CARD COMPANIES. CREDIT LIMIT CREDIT LIMIT THE MAXIMUM AMOUNT OF CREDIT A LENDER WILL EXTEND TO A CUSTOMER THE MAXIMUM AMOUNT OF CREDIT A LENDER WILL EXTEND TO A CUSTOMER

11. THE COST OF USING CREDIT FINANCE CHARGE FINANCE CHARGE IS THE ACTUAL DOLLAR COST OF USING CREDIT, WHICH IS CALCULATED BY A LENDER. IS THE ACTUAL DOLLAR COST OF USING CREDIT, WHICH IS CALCULATED BY A LENDER. ORIGINATION FEE ORIGINATION FEE USUALLY ASSOCIATED WITH HOME LOANS, IS A CHARGE FOR SETTING UP A LOAN. USUALLY ASSOCIATED WITH HOME LOANS, IS A CHARGE FOR SETTING UP A LOAN. LOAN TERM LOAN TERM LENGTH OF TIME YOU HAVE TO PAY OFF THE LOAN. LENGTH OF TIME YOU HAVE TO PAY OFF THE LOAN. LONGER THE TERM, LOWER THE MONTHLY PAYMENT LONGER THE TERM, LOWER THE MONTHLY PAYMENT

12. THE COST OF USING CREDIT GRACE PERIOD GRACE PERIOD LENGTH OF TIME YOU HAVE BEFORE YOU START ACCUMULATING INTEREST. LENGTH OF TIME YOU HAVE BEFORE YOU START ACCUMULATING INTEREST. OVER-THE-LIMIT FEE OVER-THE-LIMIT FEE SPENDING MORE THAN YOUR CREDIT LIMIT SPENDING MORE THAN YOUR CREDIT LIMIT LATE FEE LATE FEE PENALTY FOR MAKING A PAYMENT AFTER THE DUE DATE PENALTY FOR MAKING A PAYMENT AFTER THE DUE DATE UNIVERSAL DEFAULT UNIVERSAL DEFAULT HIKE UP INTEREST RATE IF YOU MAKE A LATE PAYMENT HIKE UP INTEREST RATE IF YOU MAKE A LATE PAYMENT

13. ASSIGNMENT

14. LOAN LENGTH TWO IDENTICAL ACCOUNTS WITH AN 8% INTEREST RATE AND THE SAME $1000.TWO IDENTICAL ACCOUNTS WITH AN 8% INTEREST RATE AND THE SAME $1000. THE ONLY DIFFERENCE IS THE YEARS.THE ONLY DIFFERENCE IS THE YEARS. IT WILL COST AN EXTRA $90 FOR THOSE EXTRA 2 YEARS.IT WILL COST AN EXTRA $90 FOR THOSE EXTRA 2 YEARS.

15. DOESN’T SOUND TOO BAD, RIGHT? TRY DIFFERENT NUMBERS.TRY DIFFERENT NUMBERS. HOW ABOUT $100,000 LOANHOW ABOUT $100,000 LOAN 10% INTEREST RATE10% INTEREST RATE 30 YEAR LOAN TERM.30 YEAR LOAN TERM. WHEN YOU'VE PAID OFF THE LOAN, YOU'VE ACTUALLY PAID FOR IT 3 TIMES!WHEN YOU'VE PAID OFF THE LOAN, YOU'VE ACTUALLY PAID FOR IT 3 TIMES!

16. CHANGING THE INTEREST RATE TWO LOANS, BOTH FOR $1000TWO LOANS, BOTH FOR $1000 BOTH FOR 5 YEARSBOTH FOR 5 YEARS ONE IS 9% AND THE OTHER IS 12% INTEREST RATEONE IS 9% AND THE OTHER IS 12% INTEREST RATE IT'S AN ADDITIONAL $88IT'S AN ADDITIONAL $88

17. CREDIT: THE GOOD... CONVENIENCE CONVENIENCE PROTECTION PROTECTION EMERGENCIES EMERGENCIES OPPORTUNITY TO BUILD CREDIT OPPORTUNITY TO BUILD CREDIT QUICKER GRATIFICATION QUICKER GRATIFICATION SPECIAL OFFERS SPECIAL OFFERS BONUSES BONUSES

18. ... AND THE BAD INTEREST INTEREST OVERSPENDING OVERSPENDING DEBT DEBT IDENTITY THEFT IDENTITY THEFT

19. 4-F WHEN YOU BUY “STUFF” In fact, you bought $500 worth of “STUFF” with your credit card. You bought “STUFF” with your credit card. Your APR is 18%. You plan to pay $10 a month to pay it off. You will pay $431 in interest Final cost of your purchases = $931.40 And it will take SEVEN YEARS and NINE MONTHS 1

20. 4-G HOW LONG WILL IT TAKE??? APR = 18% Minimum Payment of 4% or $120 You owe $3,000. Finance Charge $1,715.67 Total cost of original $3,000 loan = $4,715.67 After you’ve made the last payment, will what you purchased still be around??? And it will take nearly 11 YEARS to pay off! 1

21. 4-H THE COST OF USING CREDIT APR = 24% Minimum Payment of 4% or $12 $300 for a CD Player Finance Charge $149.99 Your CD player REALLY cost $449.99 After you’ve made the last payment, will your CD player still be around??? And it will take 3 years and 8 months to pay off! 1

22. CHARGE ACCOUNTS REGULAR:HAS A CREDIT LIMIT, SUCH AS $500, WHICH IS THE MAXIMUM AMOUNT OF GOODS OR SERVICES A PERSON OR BUSINESS CAN BUY ON THE PROMISE TO PAY IN THE FUTURE. REGULAR:HAS A CREDIT LIMIT, SUCH AS $500, WHICH IS THE MAXIMUM AMOUNT OF GOODS OR SERVICES A PERSON OR BUSINESS CAN BUY ON THE PROMISE TO PAY IN THE FUTURE. REVOLVING: ALLOWS YOU TO MAKE ADDITIONAL PURCHASES FROM THE SAME STORE EVEN IF YOU HAVE NOT PAID THE PREVIOUS MONTH’S BILL IN FULL. REVOLVING: ALLOWS YOU TO MAKE ADDITIONAL PURCHASES FROM THE SAME STORE EVEN IF YOU HAVE NOT PAID THE PREVIOUS MONTH’S BILL IN FULL.

23. SETTING LIMITS ON CREDIT HOW MUCH IS TOO MUCH? HOW MUCH IS TOO MUCH? A MAXIMUM OF 20% OF YOUR NET INCOME A MAXIMUM OF 20% OF YOUR NET INCOME INCLUDING MORTGAGE, CREDIT CARDS, CAR LOAN INCLUDING MORTGAGE, CREDIT CARDS, CAR LOAN ALWAYS SHOP AROUND FOR BETTER LOANS OR CREDIT ALWAYS SHOP AROUND FOR BETTER LOANS OR CREDIT APR APR LOAN TERM LOAN TERM MAXIMUM AMOUNT OF LOAN MAXIMUM AMOUNT OF LOAN MINIMUM PAYMENT AMOUNT MINIMUM PAYMENT AMOUNT ADDITIONAL, ANNUAL OR UP-FRONT FEES. ADDITIONAL, ANNUAL OR UP-FRONT FEES. PREPAYMENT PENALTIES PREPAYMENT PENALTIES

24. CREDITWORTHINESS WHEN YOU APPLY FOR CREDIT, YOU USUALLY WILL BE ASKED TO FILL OUT A CREDIT APPLICATION. WHEN YOU APPLY FOR CREDIT, YOU USUALLY WILL BE ASKED TO FILL OUT A CREDIT APPLICATION. A CREDIT BUREAU WILL THEN BE HIRED TO DO A CREDIT CHECK. A CREDIT BUREAU WILL THEN BE HIRED TO DO A CREDIT CHECK. THIS WILL REVEAL YOUR INCOME, ANY CURRENT DEBTS, DETAILS ABOUT YOUR PERSONAL LIFE, AND HOW WELL YOU HAVE REPAID DEBTS IN THE PAST. THIS WILL REVEAL YOUR INCOME, ANY CURRENT DEBTS, DETAILS ABOUT YOUR PERSONAL LIFE, AND HOW WELL YOU HAVE REPAID DEBTS IN THE PAST. USUALLY FOR THE PAST 7 – 10 YEARS. USUALLY FOR THE PAST 7 – 10 YEARS.

25. THE CREDIT RATING THIS IS A RATING OF THE RISK INVOLVED IN LENDING FUNDS TO A SPECIFIC PERSON OR BUSINESS. THIS IS A RATING OF THE RISK INVOLVED IN LENDING FUNDS TO A SPECIFIC PERSON OR BUSINESS. CREDITOR ALSO LOOKS AT 4 OTHER FACTORS THAT A CREDIT CHECK REVEALS: CREDITOR ALSO LOOKS AT 4 OTHER FACTORS THAT A CREDIT CHECK REVEALS: COLLATERAL, CAPITAL, CAPACITY, AND CHARACTER COLLATERAL, CAPITAL, CAPACITY, AND CHARACTER

26. CREDIT RATING COLLATERAL: COLLATERAL: ASSET OF VALUE THAT CAN BE TAKEN AWAY. ASSET OF VALUE THAT CAN BE TAKEN AWAY. THE SIZE OF YOUR CAPITAL OR PERSONAL WEALTH. THE SIZE OF YOUR CAPITAL OR PERSONAL WEALTH. IMPORTANT BECAUSE IT INDICATES YOUR PAST ABILITY TO SAVE AND ACCUMULATE. IMPORTANT BECAUSE IT INDICATES YOUR PAST ABILITY TO SAVE AND ACCUMULATE. INDICATES YOUR PRESENT ABILITY TO PAY INDICATES YOUR PRESENT ABILITY TO PAY

27. CONTINUED... SECURED LOANS: A LOAN THAT IS BACKED UP WITH COLLATERAL. SECURED LOANS: A LOAN THAT IS BACKED UP WITH COLLATERAL. UNSECURED LOANS: LOANS GIVEN BASED ON THE PERSON’S REPUTATION ALONE, OR IF THEY HAVE A COSIGNER – A PERSON WHO SIGNS ALONG WITH THE BORROWER AND PROMISES TO REPAY THE LOAN IF THE BORROWER DOES NOT. UNSECURED LOANS: LOANS GIVEN BASED ON THE PERSON’S REPUTATION ALONE, OR IF THEY HAVE A COSIGNER – A PERSON WHO SIGNS ALONG WITH THE BORROWER AND PROMISES TO REPAY THE LOAN IF THE BORROWER DOES NOT.

28. CREDIT RATING CAPITAL: CAPITAL: PERSONAL ITEMS OF VALUE PERSONAL ITEMS OF VALUE INVESTMENTS INVESTMENTS CAPACITY: CAPACITY: ABILITY TO REPAY A LOAN ABILITY TO REPAY A LOAN RELATED TO INCOME AND DEBT RELATED TO INCOME AND DEBT IF EMPLOYMENT HAS BEEN SPOTTY – YOUR CAPACITY TO PAY WILL BE CONSIDERED QUESTIONABLE. IF EMPLOYMENT HAS BEEN SPOTTY – YOUR CAPACITY TO PAY WILL BE CONSIDERED QUESTIONABLE. THE AMOUNT OF DEBT THAT YOU ARE ALREADY CARRYING IS ALSO A FACTOR. THE AMOUNT OF DEBT THAT YOU ARE ALREADY CARRYING IS ALSO A FACTOR. CHARACTER: CHARACTER: REFERS TO A PERSON’S REPUTATION AS A RELIABLE AND TRUSTWORTHY PERSON. REFERS TO A PERSON’S REPUTATION AS A RELIABLE AND TRUSTWORTHY PERSON. CREDITOR MAY LOOK AT YOUR EDUCATIONAL BACKGROUND, ANY PROBLEMS WITH THE LAW, ETC. CREDITOR MAY LOOK AT YOUR EDUCATIONAL BACKGROUND, ANY PROBLEMS WITH THE LAW, ETC.

29. HOW DO YOU BUILD A GOOD CREDIT HISTORY? DON’T BOUNCE CHECKS DON’T BOUNCE CHECKS MAKE ADDITIONAL DEPOSITS REGULARLY IN A SAVINGS ACCOUNT MAKE ADDITIONAL DEPOSITS REGULARLY IN A SAVINGS ACCOUNT ALWAYS PAY BILLS ON TIME ALWAYS PAY BILLS ON TIME HAVE A PARENT CO-SIGN ON A LOAN. HAVE A PARENT CO-SIGN ON A LOAN. BE CHOOSY ABOUT CREDIT CARDS AND LOANS. BE CHOOSY ABOUT CREDIT CARDS AND LOANS.

30. “ON AVERAGE, TODAY’S CONSUMER HAS A TOTAL OF 13 CREDIT OBLIGATIONS ON RECORD AT A CREDIT BUREAU.” “ON AVERAGE, TODAY’S CONSUMER HAS A TOTAL OF 13 CREDIT OBLIGATIONS ON RECORD AT A CREDIT BUREAU.”

31. CREDIT USE CREDIT ONLY FOR THINGS THAT HAVE A USEFUL LIFE BEYOND WHEN YOU FINISH PAYING FOR THEM. USE CREDIT ONLY FOR THINGS THAT HAVE A USEFUL LIFE BEYOND WHEN YOU FINISH PAYING FOR THEM. NEVER PURCHASE SOMETHING WITH A CREDIT CARD THAT YOU KNOW YOU CANNOT PAY BACK WITHIN 6 MONTHS TO 1 YEAR. NEVER PURCHASE SOMETHING WITH A CREDIT CARD THAT YOU KNOW YOU CANNOT PAY BACK WITHIN 6 MONTHS TO 1 YEAR.

32. CREDIT SCORING BASED ON THE 4 C’S OF CREDIT BASED ON THE 4 C’S OF CREDIT SCORES RANGE BETWEEN 350 - 850 SCORES RANGE BETWEEN 350 - 850 THE MEDIUM SCORE IS 723 THE MEDIUM SCORE IS 723 680 AND ABOVE IS CONSIDERED GOOD. 680 AND ABOVE IS CONSIDERED GOOD. TRACKS YOUR SUCCESS IN MANAGING MONEY RESPONSIBLY TRACKS YOUR SUCCESS IN MANAGING MONEY RESPONSIBLY RECORD OF YOUR PERSONAL FINANCIAL TRANSACTIONS RECORD OF YOUR PERSONAL FINANCIAL TRANSACTIONS CREDIT REPORT CARD FOR THE PAST 7-10 YEARS CREDIT REPORT CARD FOR THE PAST 7-10 YEARS

33. New Credit Amounts owed Types of Credit Used Length of Credit History Payment History 10% 35% 30% 10% 15%

34. WHAT IS A CREDIT SCORE? 350450550650750850 LowestHighest Very Poor FairGood Excellent

35. HOW DO I COMPARE TO THE REST OF THE POPULATION?

36. HOW DOES MY SCORE AFFECT ME? Example: $250,000 mortgage loan for 30 years:

37. INFORMATION ON CREDIT REPORTS FOUR MAIN SECTIONS: FOUR MAIN SECTIONS: IDENTIFYING INFORMATION IDENTIFYING INFORMATION CREDIT HISTORY CREDIT HISTORY PUBLIC RECORDS PUBLIC RECORDS INQUIRIES INQUIRIES “80% OF ALL CREDIT REPORTS HAVE MISTAKES!” “80% OF ALL CREDIT REPORTS HAVE MISTAKES!”

38. WHAT IS A CREDIT HISTORY? YOUR HISTORY OF PAYMENTS ON: YOUR HISTORY OF PAYMENTS ON: CREDIT CARDS CREDIT CARDS LOANS LOANS MORTGAGES MORTGAGES OTHER (MEDICAL BILLS, UTILITY BILLS, ETC) OTHER (MEDICAL BILLS, UTILITY BILLS, ETC) INCLUDES JUDGMENTS, BANKRUPTCIES, LIENS, AND ANY OTHER PUBLIC RECORDS. INCLUDES JUDGMENTS, BANKRUPTCIES, LIENS, AND ANY OTHER PUBLIC RECORDS. YOUR CREDIT REPORT IS A WRITTEN SUMMARY OF YOUR CREDIT HISTORY. YOUR CREDIT REPORT IS A WRITTEN SUMMARY OF YOUR CREDIT HISTORY.

39. CREDIT REPORTING AGENCIES EQUIFAX WWW.EQUIFAX.COM EQUIFAX WWW.EQUIFAX.COMWWW.EQUIFAX.COM EXPERIAN WWW.EXPERIAN.COM EXPERIAN WWW.EXPERIAN.COMWWW.EXPERIAN.COM TRANS UNION WWW.TRANSUNION.COM TRANS UNION WWW.TRANSUNION.COMWWW.TRANSUNION.COM YOU CAN ORDER A WRITTEN COPY OF YOUR CREDIT REPORT FOR AROUND $10. YOU CAN ORDER A WRITTEN COPY OF YOUR CREDIT REPORT FOR AROUND $10. YOU CAN ACCESS IT ON THE INTERNET YOU CAN ACCESS IT ON THE INTERNET THESE 3 COMPANIES ARE REQUIRED TO GIVE YOU A FREE REPORT ONCE A YEAR, AFTER THAT, YOU ARE CHARGED. WWW.ANUALCREDITREPORT.COM THESE 3 COMPANIES ARE REQUIRED TO GIVE YOU A FREE REPORT ONCE A YEAR, AFTER THAT, YOU ARE CHARGED. WWW.ANUALCREDITREPORT.COMWWW.ANUALCREDITREPORT.COM

40. INFORMATION ON CREDIT REPORTS YOUR CREDIT REPORT CONTAINS INFORMATION ABOUT: YOUR CREDIT REPORT CONTAINS INFORMATION ABOUT: YOUR NAME, DATE OF BIRTH, SSN, ADDRESSES YOUR NAME, DATE OF BIRTH, SSN, ADDRESSES EMPLOYMENT EMPLOYMENT TOTAL CREDIT LIMIT TOTAL CREDIT LIMIT OUTSTANDING BALANCE OUTSTANDING BALANCE NUMBER OF ACCOUNTS AND THEIR STATUS NUMBER OF ACCOUNTS AND THEIR STATUS PAYMENT HISTORY PAYMENT HISTORY CREDIT SCORE CREDIT SCORE NUMBER OF INQUIRIES NUMBER OF INQUIRIES

41. HOW DO I IMPROVE MY CREDIT SCORE? PAY YOUR BILLS ON TIME TO PROTECT YOUR CREDIT AND TO AVOID LATE FEES.PAY YOUR BILLS ON TIME TO PROTECT YOUR CREDIT AND TO AVOID LATE FEES. oIF YOU CANNOT PAY ON TIME, CALL YOUR CREDITORS BEFORE PAYMENT IS DUE TO EXPLAIN THE SITUATION. GET CURRENT AND STAY CURRENT IF YOU HAVE MISSED PAYMENTS.GET CURRENT AND STAY CURRENT IF YOU HAVE MISSED PAYMENTS. oRECENT LATE PAYMENTS ARE MORE DAMAGING THAN A BANKRUPTCY DISCHARGED A FEW YEARS AGO. oTHE LONGER YOU PAY YOUR BILLS ON TIME, THE BETTER YOUR SCORE.

42. HOW DO I IMPROVE MY CREDIT SCORE? PAY OFF YOUR ENTIRE BILL EACH MONTH.  IF YOU DO, YOU PAY ZERO INTEREST AND YOU BUILD YOUR CREDIT AT NO EXTRA COST. IF YOU CAN’T, TRY TO PAY MORE THAN THE MINIMUM PAYMENT DUE. Credit Card Balance Interest rate Minimum payment due Monthly payments How much you pay in interest Months to pay off $80018%$20 $815.49131 $80018%$20$50$121.7219 $80018%$20$80$73.3011

47. HOW DO I IMPROVE MY CREDIT SCORE? KEEP LOW BALANCES ON CREDIT CARDS (LESS THAN 15% OF YOUR LIMIT). REMEMBER, 30% OF YOUR CREDIT SCORE IS DETERMINED BY HOW MUCH CREDIT YOU USE!KEEP LOW BALANCES ON CREDIT CARDS (LESS THAN 15% OF YOUR LIMIT). REMEMBER, 30% OF YOUR CREDIT SCORE IS DETERMINED BY HOW MUCH CREDIT YOU USE! DON’T OPEN A LOT OF NEW ACCOUNTS TOO QUICKLY, ESPECIALLY IF YOU HAVE BEEN MANAGING CREDIT FOR A SHORT TIME.DON’T OPEN A LOT OF NEW ACCOUNTS TOO QUICKLY, ESPECIALLY IF YOU HAVE BEEN MANAGING CREDIT FOR A SHORT TIME.

48. HOW DO I START A CREDIT HISTORY? OPEN A SECURED CREDIT CARD. THESE ARE CREDIT CARDS BACKED BY MONEY IN A SAVINGS ACCOUNT. USE THIS CARD EVERY MONTH AND PAY IT IN FULL TO ESTABLISH A GOOD PAYMENT RECORD.OPEN A SECURED CREDIT CARD. THESE ARE CREDIT CARDS BACKED BY MONEY IN A SAVINGS ACCOUNT. USE THIS CARD EVERY MONTH AND PAY IT IN FULL TO ESTABLISH A GOOD PAYMENT RECORD. APPLY FOR CREDIT WITH A DEPARTMENT STORE OR SPECIALTY STORE.APPLY FOR CREDIT WITH A DEPARTMENT STORE OR SPECIALTY STORE. APPLY FOR AN ACCION SMALL LOAN TO START YOUR CREDIT HISTORY AND MAKE ALL YOUR PAYMENTS ON TIME (WE REPORT TO CREDIT BUREAUS).APPLY FOR AN ACCION SMALL LOAN TO START YOUR CREDIT HISTORY AND MAKE ALL YOUR PAYMENTS ON TIME (WE REPORT TO CREDIT BUREAUS).

49. HOW TO GET OUT FROM UNDER EXCESSIVE DEBT SPEND LESS THAN YOU EARN! SPEND LESS THAN YOU EARN! USE A BUDGET USE A BUDGET PAY OFF LOANS WITH HIGHEST INTEREST RATES FIRST PAY OFF LOANS WITH HIGHEST INTEREST RATES FIRST APPLY THE MONEY TOWARDS THE NEXT HIGHEST INTEREST RATE CARD APPLY THE MONEY TOWARDS THE NEXT HIGHEST INTEREST RATE CARD YOU MAY SEEK PROFESSIONAL HELP YOU MAY SEEK PROFESSIONAL HELP

50. WHO USES CREDIT SCORES? MORTGAGE COMPANIES MORTGAGE COMPANIES AUTOMOBILE LENDERS AUTOMOBILE LENDERS UTILITY COMPANIES UTILITY COMPANIES LANDLORDS LANDLORDS EMPLOYERS—BACKGROUND CHECKS EMPLOYERS—BACKGROUND CHECKS CELL PHONE COMPANIES CELL PHONE COMPANIES HOSPITALS HOSPITALS INSURANCE COMPANIES INSURANCE COMPANIES GRADUATE SCHOOLS GRADUATE SCHOOLS CREDITORS CREDITORS

51. DARK CLOUD OF DEBT 2 POPULAR METHODS TO TACKLE DEBT: 2 POPULAR METHODS TO TACKLE DEBT: 1.TAKE ANY ADDITIONAL MONEY YOU HAVE AND USE IT TO PAY OFF THE SMALLEST BALANCE FIRST. 1.TAKE ANY ADDITIONAL MONEY YOU HAVE AND USE IT TO PAY OFF THE SMALLEST BALANCE FIRST. AFTER YOU REPAY THAT BALANCE, APPLY THE SAME PAYMENT AMOUNT TO THE CARD WITH THE NEXT SMALLEST BALANCE AFTER YOU REPAY THAT BALANCE, APPLY THE SAME PAYMENT AMOUNT TO THE CARD WITH THE NEXT SMALLEST BALANCE 2.CONCENTRATE FIRST ON REPAYING THE DEBT WITH THE HIGHEST INTEREST RATE. 2.CONCENTRATE FIRST ON REPAYING THE DEBT WITH THE HIGHEST INTEREST RATE. WILL SAVE YOU MORE IN INTEREST CHARGES OVER TIME, BUT PROGRESS IS HARDER TO SEE. WILL SAVE YOU MORE IN INTEREST CHARGES OVER TIME, BUT PROGRESS IS HARDER TO SEE.

52. BANKRUPTCY A LAST RESORT TO CONSIDER WHEN YOU HAVE EXCESSIVE DEBT A LAST RESORT TO CONSIDER WHEN YOU HAVE EXCESSIVE DEBT BANKRUPTCY IS A LEGAL PROCESS THAT ALLOWS SOMEONE DEEPLY IN DEBT TO CREATE A PLAN TO GET OUT OF IT. BANKRUPTCY IS A LEGAL PROCESS THAT ALLOWS SOMEONE DEEPLY IN DEBT TO CREATE A PLAN TO GET OUT OF IT. PROVIDES A CLEAN SLATE. PROVIDES A CLEAN SLATE. WHEN A BANKRUPTCY IS APPROVED THROUGH A BANKRUPTCY COURT, DEBTORS MUST GIVE UP MOST OF WHAT THEY OWN, WHICH IS THEN DISTRIBUTED TO THEIR CREDITORS. WHEN A BANKRUPTCY IS APPROVED THROUGH A BANKRUPTCY COURT, DEBTORS MUST GIVE UP MOST OF WHAT THEY OWN, WHICH IS THEN DISTRIBUTED TO THEIR CREDITORS.

53. BANKRUPTCY TWO KINDS OF BANKRUPTCY: TWO KINDS OF BANKRUPTCY: CHAPTER 7: CHAPTER 7: MUST BE UNEMPLOYED OR HAVE A LOW INCOME. THIS ALLOWS YOU TO ERASE MOST OF YOUR DEBT. MUST BE UNEMPLOYED OR HAVE A LOW INCOME. THIS ALLOWS YOU TO ERASE MOST OF YOUR DEBT. FINANCIAL COUNSELING FINANCIAL COUNSELING CHAPTER 13: CHAPTER 13: PAY BACK DEBT WITH MORE TIME. (ABOUT 5 YEARS) PAY BACK DEBT WITH MORE TIME. (ABOUT 5 YEARS) A COURT USUALLY OVERSEES THE REPAYMENT PLAN. A COURT USUALLY OVERSEES THE REPAYMENT PLAN.

54. BANKRUPTCY IS VERY COSTLY: LENDERS: LENDERS: MUST ABSORB LOAN LOSSES THEY CAN’T RECOVER BY RAISING RATES ON OTHER LOANS AND SERVICES. MUST ABSORB LOAN LOSSES THEY CAN’T RECOVER BY RAISING RATES ON OTHER LOANS AND SERVICES. RESPONSIBLE BORROWERS: RESPONSIBLE BORROWERS: MUST PAY HIGHER RATES TO HELP LENDERS RECOVER LOSSES ON BAD LOANS. MUST PAY HIGHER RATES TO HELP LENDERS RECOVER LOSSES ON BAD LOANS. PEOPLE WHO’VE DECLARED BANKRUPTCY: PEOPLE WHO’VE DECLARED BANKRUPTCY: ACTIONS REMAIN ON THEIR CREDIT RECORDS FOR 10 YEARS ACTIONS REMAIN ON THEIR CREDIT RECORDS FOR 10 YEARS MIGHT FIND IT HARDER AND MORE EXPENSIVE TO BORROW FROM WARY LENDERS IN THE FUTURE. MIGHT FIND IT HARDER AND MORE EXPENSIVE TO BORROW FROM WARY LENDERS IN THE FUTURE.

55. GOVERNMENT REGULATION OF CREDIT SOME STATES HAVE SET A MAXIMUM ON THE INTEREST RATES CHARGED FOR CERTAIN TYPES OF CREDIT. SOME STATES HAVE SET A MAXIMUM ON THE INTEREST RATES CHARGED FOR CERTAIN TYPES OF CREDIT. FEDERAL GOVERNMENT HAS ALSO PASSED LAWS DESIGNED TO INCREASE THE FLOW OF CREDIT INFORMATION TO CONSUMERS. FEDERAL GOVERNMENT HAS ALSO PASSED LAWS DESIGNED TO INCREASE THE FLOW OF CREDIT INFORMATION TO CONSUMERS.

56. TRUTH IN LENDING ACT ENSURES THAT CONSUMERS ARE FULLY INFORMED ABOUT THE COSTS AND CONDITIONS OF BORROWING. ENSURES THAT CONSUMERS ARE FULLY INFORMED ABOUT THE COSTS AND CONDITIONS OF BORROWING. LENDERS MUST TELL YOU IN WRITING THE TRUE INTEREST RATE AND TOTAL FINANCE CHARGE BEFORE YOU SIGN LENDERS MUST TELL YOU IN WRITING THE TRUE INTEREST RATE AND TOTAL FINANCE CHARGE BEFORE YOU SIGN TRUTHFUL AND NOT MISLEADING IN THEIR ADVERTISEMENTS. TRUTHFUL AND NOT MISLEADING IN THEIR ADVERTISEMENTS.

57. EQUAL CREDIT OPPORTUNITY ACT THOSE WHO PROVIDE CREDIT CANNOT DENY YOU SUCH CREDIT SOLELY ON THE BASIS OF YOUR RACE, RELIGION, NATIONAL ORIGIN, GENDER, MARITAL STATUS, AGE, OR RECEIPT OF PUBLIC ASSISTANCE. THOSE WHO PROVIDE CREDIT CANNOT DENY YOU SUCH CREDIT SOLELY ON THE BASIS OF YOUR RACE, RELIGION, NATIONAL ORIGIN, GENDER, MARITAL STATUS, AGE, OR RECEIPT OF PUBLIC ASSISTANCE.

58. STATE USURY LAWS RESTRICTS THE AMOUNT OF INTEREST THAT CAN BE CHARGED FOR CREDIT. RESTRICTS THE AMOUNT OF INTEREST THAT CAN BE CHARGED FOR CREDIT. CONSUMER FINANCE AGENCIES ARE OFTEN ALLOWED TO CHARGE HIGHER RATES BECAUSE THEIR LOANS INVOLVE HIGHER RISKS. CONSUMER FINANCE AGENCIES ARE OFTEN ALLOWED TO CHARGE HIGHER RATES BECAUSE THEIR LOANS INVOLVE HIGHER RISKS.

59. TYPES OF FINANCIAL INSTITUTIONS COMMERCIAL BANKS COMMERCIAL BANKS SAVINGS AND LOAN ASSOCIATIONS SAVINGS AND LOAN ASSOCIATIONS SAVINGS BANKS SAVINGS BANKS CREDIT UNIONS CREDIT UNIONS FINANCE COMPANIES FINANCE COMPANIES