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Mastering Credit: A Comprehensive Guide to Wise Financial Choices

Learn all about credit - what it is, how to use it wisely, and ways to minimize costs. Discover the advantages and disadvantages, types of credit, tips to build credit, and information on credit reports. Take control of your financial future today!

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Mastering Credit: A Comprehensive Guide to Wise Financial Choices

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  1. Keys to Credit

  2. What is Credit? • Buy now – pay later • Financial tool • Binding contract

  3. Advantages of Using Credit • Establish credit history • Use of item now • Safety • Take advantage of bargains • Convenience • Emergency funds • Consolidate bills • Spending record

  4. Disadvantages of Using Credit • Tend to overspend • Credit history damaged if misused • Fees • Interest (APR) • Commits future income

  5. Ways to Minimize Credit Costs • Shop for the lowest APR • Borrow only amount really needed • Pay more than minimum monthly

  6. Ways to Minimize Credit Costs • Pay cash whenever possible • Take out a loan for the shortest time possible • Pay bills on time

  7. The 3 C’s of Credit • Character • Capital • Capacity

  8. Types of Credit • Installment credit • Non-Installment credit

  9. Paycheck Loans • Borrow money against your future paycheck • Always a loan fee • Interest is very high

  10. Information on Credit Reports • Identification & employment data • Payment history • Inquiries • Public record information

  11. Sample Credit Report

  12. Credit reports used by: • Banks • Landlords • Car dealers • Insurance companies • Retail stores • Employers

  13. Major Credit Reporting Agencies • Equifax • Experian • Trans Union Offer free report every 12 monthswww.annualcreditreport.com

  14. FICO Scores

  15. Sample Credit Report

  16. Sample Credit Report

  17. Sample Credit Report

  18. If there are mistakes… • Write CRA • Explain error • Include copies of documents • CRA must check into

  19. Building a Credit Rating • Open checking & savings account • Apply for credit with your bank • Buy something on time from a store • Apply for a gas card • Get a co-signer

  20. Most Important!!! Pay your bills on time

  21. Misuse of credit can: • Ruin credit history & chances of qualifying for future credit • Make it hard to find a place to live or get a job • Result in bankruptcy

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