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CONCEPTS OF CREDIT

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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  1. CONCEPTS OF CREDIT PERSONAL FINANCIAL PLANNING DR. AA NEIDERMEYER

  2. WHY BORROW $$? • TO AVOID LARGE CASH OUTLAYS • TO MEET AN EMERGENCY • FOR CONVENIENCE • FOR INVESTMENT

  3. 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

  4. 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

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

  6. 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

  7. TYPES OF OPEN ACCOUNT CREDIT • BANK CREDIT CARDS • REBATE CREDIT CARDS • RETAIL CHARGE CARDS • TRAVEL & ENTERTAINMENT CARDS • PRESTIGE CARDS • AFFINITY CARDS • SECURED CREDIT CARDS

  8. ADDITIONAL PAYMENT OPTIONS • DEBIT CARDS • PREPAID CARDS • REVOLVING LINE OF CREDIT • OVERDRAFT PROTECTION • HOME EQUITY LINE OF CREDIT

  9. ACCESSING CREDIT • THE APPLICATION • CREDIT INVESTIGATION • INTERFACING WITH THE CREDIT BUREAU • CHECKUP BEFORE APPLYING • CREDIT REPORT • UNIFIED FROM THE BUREAU • INDIVIDUALLY

  10. CHECKING YOUR CREDIT • EQUIFAX • 1-800-997-2493 • TRANS-UNION • 1-800-888-4213 • EXPERIAN • 1-888-397-3742 • DETERMINING YOUR SCORE

  11. 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

  12. INTEREST COMPUTATION • ADB INCLUDING NEW PURCHASES • ADB EXCLUDING NEW PURCHASES • TWO-CYCLE ADB INCLUDING NEW PURCHASES • TWO-CYCLE ADB EXCLUDING NEW PURCHASES

  13. 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

  14. 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

  15. ADDRESSING IDENTITY THEFT • CONTACT THE FEDERAL TRADE COMMISSION’S IDENTITY THEFT HOTLINE • 1-877-438-4338 • NOTIFY LOCAL POLICE AND POSTMASTER

  16. CREDIT COUNSELING • CONTACT THE NATIONAL FOUNDATION FOR CONSUMER CREDIT • WWW.NFCC.ORG

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