html5-img
1 / 17

Chapter 26 – How to Get and Keep Credit

Chapter 26 – How to Get and Keep Credit. What I need to know…. Developing a Credit History. Without a History Banks will not loan you money and/or You will pay very high interest rates Ways to begin developing a Credit History Open a Checking and Savings Account Get a Debit Card

nydia
Download Presentation

Chapter 26 – How to Get and Keep Credit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 26 –How to Get and Keep Credit What I need to know…

  2. Developing a Credit History • Without a History • Banks will not loan you money and/or • You will pay very high interest rates • Ways to begin developing a Credit History • Open a Checking and Savings Account • Get a Debit Card • Apply for a Secured Credit Card • Charge Small balances and pay bill in full each month NOTE: IF YOU HANDLE THE ABOUT RESPONSIBLY THEN…

  3. Developing a Credit History • You will have a good chance of getting a car loan, mortgage or a personal loan • BEFORE APPLYING FOR A LOAN • Check your Credit Report – fix discrepancies • Bring the following when applying for a loan: • PROOF OF INCOME: Pay stubs, tax reports, bank statements, or any other proof of income • PROOF OF IDENTITY: Social Security Number and Driver’s License • If they feel you are not credit worthy you may need a Cosigner

  4. CREDIT WORTHY – 3 C’s of CREDIT • Character: does the lender think you are honest, reliable, and lead a stable life • Have you used credit before? • Do you pay bills on time? • How long have you lived at your present address? • How long have you been working at your present job? • What is your credit score?

  5. CREDIT WORTHY – 3 C’s of CREDIT • Capital: do you have assets such as real estate, personal property, investments, or savings that the lender can take if you do not repay the loan • What property do you own that can secure the loan? • Do you have a savings account? How much? • Do you have any investments?

  6. CREDIT WORTHY – 3 C’s of CREDIT • CAPACITY: do you have enough income to pay the loan • Do you have a steady job? What is your salary? • How many other loan payments do you have? • What are your current living expenses? (Budget) • What are your current debts? • How many dependents do you have?

  7. What’s Your FICO SCORE? • Credit Score – • CREDIT SCORES – Vary from different lenders • Range from 300 – 850 • Good 600-750 • Excellent – 700 + • What Impacts your Score? • Late Payments • Types of credit • Loans (cars/Home), Credit Cards, Store Loans (Best Buy/Ashley) • Number of loans/credit cards • TOTAL DEBT • Public Records – Bankruptcy, Judgments

  8. Credit Scores • Things not considered in your Score • Race, religion, national origin, sex, or marital status • Age • Where you live • Occupation, title, employer, on Public Assistance • LENDERS LOOK AT THESE BUT IT DOES NOT AFFECT SCORE • Consequences of Scores • Low score will keep you from getting a loan and/or paying a higher interest rate

  9. Comparing Credit Cards • List the different features of credit cards that you may need to compare… • Why do some credit cards charge and Annual Fee? • Most important if: • Pay balance off each month? • Don’t pay balance off • Use you credit card to get cash • Don’t keep good track of your checking account balance

  10. Facts about loans and mortgages • Most are secured • Backed by collateral • Interest Rates/Finance Charges • Variable • Fixed • Most need a down payment • A loan’s Principal • Amount Financed • Cosigner • Needed with poor credit history or no credit history • Someone with good credit also signs the loan • If you default…they have to pay

  11. Keeping a Healthy Credit Record CLICK HERE FOR VIDEO • Pay Bills on time • Don’t carry more credit cards than you need • Stay within your means – no more than 20% of your Income for consumer Credit • Check your Credit Report yearly • Correct Errors on your Report

  12. Signs of Credit Trouble • Can only pay minimum payment • Can’t pay bills on time • Getting calls from Creditors • Garnishment of Wages • Repossess

  13. How Much Debt can you Afford? • Never borrow more than 20% of your Annual net income • If you make $400 a month • 400 X 12 +4800 • 4800 *.2 =$960 . • Outstanding Debt not including housing • Monthly payments shouldn’t exceed • More tan 10% of your monthly take home • $400 a month - $40 monthly debt payment

  14. Debt-to-income ratio • Your debt-to-income ratio usually gives a clear picture of your financial well-being. • To calculate it • add up your fixed monthly expenses, such as rent, mortgage or credit card payments (do not include expenses like utilities or groceries). • Then divide the total by your monthly take-home pay (net pay) • It should not be more than 28%

  15. IDENTITY THEFT Deter...Detect…Defend

  16. Credit Reports

  17. Free Credit Report . Com • http://www.youtube.com/watch?v=YzkBhfbwRkg Annual Credit Report.com • http://www.youtube.com/watch?v=4GC9dobzEKc Which one’s for you??????

More Related