Credit documentsCredit documents

Essential QuestionEssential Question

What are the commonly used credit What are the commonly used credit documents?documents?

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Credit DocumentsCredit Documents

Credit contractCredit contract

• Credit contracts are legal binding documents that allow Credit contracts are legal binding documents that allow debtors to use credit to obtain goods and services. debtors to use credit to obtain goods and services.

• Debtors should know the content of the credit contract Debtors should know the content of the credit contract before signing such as:before signing such as:

Amount of finance chargesAmount of finance charges Repairs covered Repairs covered Add-on featuresAdd-on features Reduction of finance charge if contract paid in full prior to Reduction of finance charge if contract paid in full prior to

ending dateending date Receive the copy of the contractReceive the copy of the contract Repossession conditionsRepossession conditions

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Credit Documents continuedCredit Documents continued

Statement of accountStatement of account• Comes once credit is granted and purchases Comes once credit is granted and purchases

are made on credit.are made on credit.• Comes monthly and includes summary of Comes monthly and includes summary of

transactions completed during the billing transactions completed during the billing period.period.

What kind of information may be found on the What kind of information may be found on the statement of account?statement of account?

Balance dueBalance due Amounts charged or credited during the Amounts charged or credited during the

billing periodbilling period Current balanceCurrent balance Minimum amount of next paymentMinimum amount of next payment 3

Credit regulations and Credit regulations and assistance optionsassistance options

Essential QuestionEssential Question

How do credit regulations protect the How do credit regulations protect the rights of credit applicants and users?rights of credit applicants and users?

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Credit Regulations Credit Regulations

Truth in Lending Law Truth in Lending Law requires lenders to requires lenders to reveal the cost of credit (APR and finance reveal the cost of credit (APR and finance charge) and terms before signing an charge) and terms before signing an application or contractapplication or contract..

Equal Credit Opportunity Act Equal Credit Opportunity Act allows allows credit applications be judged on financial credit applications be judged on financial responsibility of credit applicants. The three responsibility of credit applicants. The three areas of responsibilities are low income, areas of responsibilities are low income, large debts, and a poor payment record.large debts, and a poor payment record.

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Credit Regulations continued Credit Regulations continued

Fair Credit Billing Act Fair Credit Billing Act requires requires creditors to correct billing mistakes creditors to correct billing mistakes promptly.promptly.

Fair Credit Reporting Act Fair Credit Reporting Act allows allows individuals to scrutinize any information individuals to scrutinize any information shared by credit reporting agencies with shared by credit reporting agencies with potential creditors and employers. potential creditors and employers. Individuals also may correct any incorrect Individuals also may correct any incorrect credit information.credit information.

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Credit Regulations continued Credit Regulations continued

Consumer Credit Reporting Reform Consumer Credit Reporting Reform Act Act requires that the credit reporting requires that the credit reporting agency must be able to prove that credit agency must be able to prove that credit information they provide is accurate.information they provide is accurate.

Fair Debt Collections Act Fair Debt Collections Act prohibits prohibits deceptive, harassing, and unfair deceptive, harassing, and unfair practices for collecting debt from practices for collecting debt from debtors. debtors.

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Credit Regulations continued Credit Regulations continued

Credit Card Accountability, Credit Card Accountability, Responsibility, and Disclosure Responsibility, and Disclosure Act Act is an amendment to the Truth in is an amendment to the Truth in Lending Act. The act institutes fair Lending Act. The act institutes fair and transparent practices of and transparent practices of providing credit.providing credit.

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Credit Regulations continued Credit Regulations continued

Some practices are instituted by the CARD Some practices are instituted by the CARD Act are:Act are:• Inform customers of increase of cost of credit Inform customers of increase of cost of credit

not less than 45 days prior to effective date.not less than 45 days prior to effective date.• Provides information about how long it would Provides information about how long it would

take to pay off a loan if minimum payments take to pay off a loan if minimum payments are paid.are paid.

• Protects potential credit consumers under Protects potential credit consumers under the age of 21, who must have a cosigner the age of 21, who must have a cosigner with a means to repay debt of the consumer.with a means to repay debt of the consumer.

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Credit assistanceCredit assistance

Essential QuestionEssential Question

How do credit assistance options How do credit assistance options

address problems of credit users?address problems of credit users?

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Credit AssistanceCredit Assistance

Available in the forms ofAvailable in the forms of• Debt repayment planDebt repayment plan• Credit counselingCredit counseling• BankruptcyBankruptcy

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Credit Assistance continuedCredit Assistance continued

Debt repayment planDebt repayment plan• Is an agreement between a creditor and debtor Is an agreement between a creditor and debtor

that allows the debtor to pay off a debt with that allows the debtor to pay off a debt with more manageable payment plan.more manageable payment plan.

Credit counseling Credit counseling • Provides information on actions to take in order Provides information on actions to take in order

to manage debt.to manage debt. BankruptcyBankruptcy

• May be used by debtors to reduce debt or May be used by debtors to reduce debt or amount owed to creditors.amount owed to creditors.

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