CreditBy Mr. Butka

Belleville High School

Why do you think it matters what sort of credit history/rating a person has?

5 sentence minimum

Unit 2 Journal # 3

The practice of buying goods / services now and paying for them later

One form is a loan: borrowed money paid back with interest.

What is Credit?

Character◦ Past history of paying bills

Capacity◦ Income level / ability to payback

Capital◦ Assets (liquid and non-liquid)◦ Collateral◦ What you can offer as insurance to the lender◦ Cosigner

Conditions◦ Current economic status

The 4 C’s of Credithow lenders decide

Credit Score Description

760 - 849 Excellent score. The lender will offer you their best interest rate.

700 - 759 Great score. There won't be any trouble in getting a loan at good interest rate.

660 - 699 Good score. There won't be any problem in getting a loan at good interest rate.

620 - 659 Fair score. You may qualify for the loan but not at good interest rates.

580 - 619 Poor score. You may qualify but the interest rates will be very high.

500 - 579 Very poor score. It's doubtful that you may qualify for the loan, and if you qualify, the interest rates will be extremely high.

Credit Score

Limited Credit Card Bills Bank Account Debit Card MSN Tips for Parents

So What Can YOU Do NOW About Your Credit?

Annual Fee: The amount you have to pay annually for membership (not all do this)

Interest Rate: The Annual Percentage Rate, the rate may be variable or fixed.

Grace Period: Period from bill to due date. Minimum Payment: Variable or fixed. Credit Limit: Maximum amount you can

charge. Other Fees: Late fees, overcharge, etc. Bonuses: Incentive for you to use the card.

Credit Card “Mumbo Jumbo”

This site is a great calculator for credit charges

So What is the Cost?

Understand Credit Card Statement Money Skills Beware Debit Card Holders!

Feel free to create an informative presentation ;PowerPoint, Impress, or other Digital means, covering any topic of interest on these sites. (extra credit)

Some Informative Sites

The following changes that you/your parents will see on their credit card statement

45 days notice if your interest rate will increase or if it makes changes in annual fees, late fees or other charges.

Caveat! Unless APR is set on a variable rate (e.g. index, or fed rate)

Credit Card Accountability Responsibility and Disclosure Act of 2009

Suppose you have offers from three credit card companies. Company A offers a fixed APR of 12% and an annual fee of $60.00. Company B has no annual fee and offers an introductory rate of 9% which rises to 19% after 3 months. Company C offers a fixed APR of 15% with an annual fee of $30.00. If you intend to pay off the balance each month which of these offers is best for you?

Closing Formative

Bring your text book Budgets & You!

Tomorrow