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CONCEPTS OF CREDIT. PERSONAL FINANCIAL PLANNING DR. AA NEIDERMEYER. WHY BORROW $$?. TO AVOID LARGE CASH OUTLAYS TO MEET AN EMERGENCY FOR CONVENIENCE FOR INVESTMENT. CREDIT DANGER SIGNS. USE CARDS TO BUY ON IMPULSE POSTDATE CHECKS BORROW TO THE LIMIT

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CONCEPTS OF CREDIT

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Concepts of credit

CONCEPTS OF CREDIT

PERSONAL FINANCIAL PLANNING

DR. AA NEIDERMEYER


Why borrow

WHY BORROW $$?

  • TO AVOID LARGE CASH OUTLAYS

  • TO MEET AN EMERGENCY

  • FOR CONVENIENCE

  • FOR INVESTMENT


Credit danger signs

CREDIT DANGER SIGNS

  • USE CARDS TO BUY ON IMPULSE

  • POSTDATE CHECKS

  • BORROW TO THE LIMIT

  • BORROW TO MEET NORMAL LIVING EXPENSES

  • PAY ONLY MINIMUM ON CARDS

  • FALL BEHIND ON PAYMENTS


Building a credit history

BUILDING A CREDIT HISTORY

  • USE CREDIT WHEN YOU CAN AFFORD IT

  • FULFILL ALL CREDIT TERMS

  • PAY CONSISTENTLY

  • CONSULT CREDITORS IF DIFFICULTY OCCURS

  • BE TRUTHFUL ON APPLICATIONS


Guidelines

GUIDELINES

  • MAKE SURE THAT YOUR MONTHLY REPAYMENT BURDEN DOES NOT EXCEED 20% OF TAKE-HOME PAY


Gender considerations

GENDER CONSIDERATIONS

  • WOMEN:

  • USE YOUR LEGAL NAME TO BUILD YOUR CREDIT HISTORY

  • AS TO HAVE CREDIT REPORTS FILED WITH YOUR NAME IN ADDITION TO SPOUSE’S

  • MAINTAIN YOUR OWN FILE AFTER MARRIAGE


Types of open account credit

TYPES OF OPEN ACCOUNT CREDIT

  • BANK CREDIT CARDS

  • REBATE CREDIT CARDS

  • RETAIL CHARGE CARDS

  • TRAVEL & ENTERTAINMENT CARDS

    • PRESTIGE CARDS

    • AFFINITY CARDS

  • SECURED CREDIT CARDS


Additional payment options

ADDITIONAL PAYMENT OPTIONS

  • DEBIT CARDS

  • PREPAID CARDS

  • REVOLVING LINE OF CREDIT

  • OVERDRAFT PROTECTION

  • HOME EQUITY LINE OF CREDIT


Accessing credit

ACCESSING CREDIT

  • THE APPLICATION

  • CREDIT INVESTIGATION

    • INTERFACING WITH THE CREDIT BUREAU

  • CHECKUP BEFORE APPLYING

    • CREDIT REPORT

      • UNIFIED FROM THE BUREAU

      • INDIVIDUALLY


Checking your credit

CHECKING YOUR CREDIT

  • EQUIFAX

    • 1-800-997-2493

  • TRANS-UNION

    • 1-800-888-4213

  • EXPERIAN

    • 1-888-397-3742

  • DETERMINING YOUR SCORE


Credit scoring details

CREDIT SCORING DETAILS

  • SCORE IS WEIGHTED AS FOLLOWS

    • 35% ON PAYMENT HISTORY

    • 30% ON OUTSTANDING DEBT

    • 15% ON CREDIT HISTORY

    • 10% ON NUMBER OF INQUIRIES

    • 10% ON TYPES OF CREDIT


Interest computation

INTEREST COMPUTATION

  • ADB INCLUDING NEW PURCHASES

  • ADB EXCLUDING NEW PURCHASES

  • TWO-CYCLE ADB INCLUDING NEW PURCHASES

  • TWO-CYCLE ADB EXCLUDING NEW PURCHASES


Shopping for credit

SHOPPING FOR CREDIT

  • EVALUATE ANNUAL FEES

  • KNOW THE RATE OF INTEREST CHARGED ON THE ACCOUNT

  • UNDERSTAND THE GRACE PERIOD

  • BE AWARE OF THE COMPUTATION OF BALANCES

  • WWW.BANKRATE.COM


Protect against identity theft

PROTECT AGAINST IDENTITY THEFT

  • DO NOT THROW OUT CC RECEIPTS

  • DO NOT THROW OUT CANCELLED CHECKS

  • DO NOT THROW OUT PRE-APPROVED CREDIT CARD APPLICATIONS

  • DO NOT GIVE OUT PERSONAL INFORMATION UNLESS YOU KNOW USE OF SAME


Addressing identity theft

ADDRESSING IDENTITY THEFT

  • CONTACT THE FEDERAL TRADE COMMISSION’S IDENTITY THEFT HOTLINE

  • 1-877-438-4338

  • NOTIFY LOCAL POLICE AND POSTMASTER


Credit counseling

CREDIT COUNSELING

  • CONTACT THE NATIONAL FOUNDATION FOR CONSUMER CREDIT

  • WWW.NFCC.ORG


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