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Credit Cards

Independent Living

+The granting of credit: The 3 C’s In order to be approved for a credit card the

creditor will look at the following things:Capacity: you’re ability to repay what you

chargeCollateral: if you don’t pay what can they

take back (doesn’t apply for credit cards)Character: based on your credit bureau

score, past experience with credit cards

+Your credit bureau score:

What is it? Each person is given a score based on their credit character Can be anywhere from 0-850

How is it calculated? Payment history, amounts owed, length of history, new

credit, types of credit

+Your credit bureau score:

Why is it important? Your score follows you everywhere and affects everything:

Ability to get a loan Ability to get a credit card Ability to rent/buy a home Ability to buy a car

+Key terms:

APR- annual percentage rate, variable/can change (important to know if you don’t pay off your credit cards)

+Key terms:

Fees: late fee, over limit fee, etc.

+Key terms:

Interest calculation: based on average daily balance

+Key terms

Grace Period: the time you get to pay balance in full without interest charges

+What things can hurt score the most?Maxed out credit cardsBankruptcyMissing a payment

+What should you look for when shopping for a credit card?Low APRDoes it offer rewards?Do they change fees?

+Additional notes:

When to get a credit card?If you’re 18, apply with a co-signer now,

start building creditApply for a store card (Kohl’s, Target, etc.)

You can officially get a credit card on your own at age 18, but if you’re under 21 you need to prove income or have a co-signer