how to maintain good credit?. obtaining goods and services with a promise to pay for them from...
TRANSCRIPT
CreditHow to maintain good credit?
What is CreditObtaining goods and services with a
promise to pay for them from future income
to buy today and pay tomorrow
involves two parties, a lender and a borrower
What are the types of Credit?
Sales Credit: to purchase goods and services from retailers, revolving credit
Cash Credit : money granted to use for a variety of purposes: Unsecured loans(no collateral) Secured Loans (Collateral)
and Cash Credit (loans with Installments payment)
Credit Reports Is a report card reflecting how well
you use creditThree sources; Equifax, Experian and
TransUnion
Fair Credit Reporting Act; 1 free credit report a year
How to establish Credit?
3’s C--- Character: reputation of honesty
Capacity: employment history
Capital: financial worth
Creditor lend to people who can pay back!!
Loan SourcesPreferred Lenders: Most reliable
lender; banks, credit unions and private loans
Non-preferred lenders: take advantage of people with poor credit; payday lenders, auto loan lenders and loan sharks etc….
Conditions of LoansAnnual FeesAPR (Annual Percentage Rate) InterestMinimum paymentGrace periodChargesCredit limitFeatures and services
Caution!!!!!!Read the fine print Is it wise or unwise to use creditProvide information about income,
employment , credit history etc..They will run your creditTruth Lending Act; rescission
(Companies) can cancel within three days.
How to Maintain Good Credit
Understand your need to borrow Identify and use the right type to
creditKnow how you will pay backOnly use the amount of credit you
can affordKeep recordsConsult creditors immediately if you
have problemsResolve billing errors
Signs there is a Problem
No savingStressed and Worrying over money
problemsReached credit limitsSkip paymentsUse cash advance to pay billUse credit for day-to day itemsOpen credit so you can reach credit
limitsAgencies are trying to collect from
you!!!
Getting Out of Debt
Deal with the problem Stop using Credit Get help Develop spending plan Contact Creditors immediately
Chapter 7– Must sell personal belonging to pay back
Chapter 13– Can retain belongings but must have a repayment plan