Getting Smart About Credit.

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Getting Smart About Credit.

• Provided by
• The Credit Education Bureau
• 585-256-6080

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Credit is an arrangement for deferred payment of
a loan or purchase.
What is credit?
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Why Should You Pay Attention?

• So you dont have to call me after you graduate
  from college.
• So you dont have to live with your parents
  after you graduate from college.
• So you dont have to walk to work after you
  graduate from college.
• So you can get a decent job and dont have to
  work at McDonalds after you graduate from
  college.

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What do You Need to Know To Get Smart?

• Why having a good credit history really matters
• How credit cards work.
• How interest works.
• How to establish a credit history.
• How to use credit.

I used my credit card to buy this burger!
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1. Why Good Credit Really Matters.
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Your Credit History is Your Financial Report Card.
Im sure I can get a loan with a face like this!
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Your Credit History is Your Financial Report Card.

• Having a good credit history is like having a
  4.0.
• Everybody trusts you.
• Having a bad credit history is like having a few
  Fs.
• Everyone cant help but wonder

Im sure I can get a loan with a face like this!
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Your Credit History is Used to Determine Your
Character.

• Creditors and lenders use the three Cs.
• Character
• Capacity
• Capital
• Creditors and lenders cannot use
• Age, race, gender, marital status, religion,
  national origin, or receipt of public assistance.

Im sure I can get a loan with a face like this!
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2. How Credit Cards Work.
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Credit Cards Are Not Free Money.

• Credit is an arrangement for deferred payment of
  a loan or purchase.
• If you spend 100 on your Visa or MasterCard, you
  have to pay 100 back.
• If you cant pay the 100 back all at once, you
  will have to pay a fee.

Then I probably shouldnt have bought that
Ferrari.
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Who do You Pay?

• You dont pay Visa, MasterCard, Discover or Amex.
• These are considered networks.
• You pay the issuer of the credit card.
• The banks or financial companies who give you the
  loan.

I just paid the wrong person!!
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It Can Cost More to Use Credit.

• If you had a 500 balance, you would only be
  required to pay 10 a month, but
• If you dont pay off the balance every month
• You will be charged interest.

Good thing Im an oil tycoon!
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It Can Cost More to Use Credit.

• Some companies also charge an annual fee.
• All companies charge penalty fees
• Late fees
• Over limit fees
• Cash advance fees
• Average cost of 29

Good thing Im an oil tycoon!
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3. How Interest Works.
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Its All About the APR!

• APR stands for Annual Percentage Rate.
• Its the annual average total cost of the
  interest, principal and finance charges.

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Interest is a Percent of the Amount You are
Loaned.

• A credit card with an 18 interest rate
• A credit limit of 1000
• What would you like to buy?

The bank told me I have a 22 interesting rate! I
think that means theres a 22 chance shell like
me!
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Interest is a Percent of the Amount You are
Loaned.

• If you only paid the minimum payment of 20 each
  month
• It would take 8 years and 5 months to pay off the
  balance.
• It will cost 1087 in additional interest.

The bank told me I have a 22 interest rate. I
think that means theres a 22 chance shell be
interested in me!
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Heres How it Adds Up

• If your credit card has an APR of 18
• You spend up to your limit of 1000
• You only pay the minimum payment of 20
• The interest owed would be 15
• The APR of 18 1.5 interest per month
• You still owe 995
• It will take 8years

Pardon me do you have any APR?
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4. How to Establish a Credit History.
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Demonstrate That You are a Good Risk.

• You have to be at least 18 years of age.
• Have a regular source of income.(Get a job!)
• Open a checking and savings account.

Good thing you started working at Mutt Cuts!
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Establish a Credit History.

• First, consider a secured credit card.
• Requires a bank account as security.
• Your limit is your deposit.

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Establish a Credit History.

• Secondly, consider applying for a store card.
• Sears, Kaufman's, JC Pennys, etc.
• Easier to be approved but have higher interest
  rates.

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Establish a Credit History.

• Thirdly, if all else fails, consider asking
  someone to co-sign for you.
• Perhaps a relative.
• Someone with an established credit history.
• They promise to pay your debts if you dont.

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None of These Things Will Work Unless
You look like this!!

• You use credit wisely.

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5. How to Use Credit.
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The Bottom Line

• Dont use more credit than you can handle.
• Only spend as much as you can pay off each month.
• Never have more than 2 credit cards at a time.
• Too much credit is just as bad as not having
  enough.

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The Bottom Line

• Pay your bills on time.
• Being as little as 30 days late will stay on your
  credit file for 7 years!
• If you are going to be late, call your credit
  card issuer.
• They can work out some kind of arrangement if you
  call before youre late.

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The Bottom Line

• Credit cards should be used for convenience or
  for emergencies only.
• They should not be used to buy things you could
  not otherwise afford.
• What would we have if there werent any credit
  cards? 18 more stuff!

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Dont Abuse Credit

• If you dont use credit wisely
• It will affect your credit report.
• You will have trouble obtaining future credit.
• You will end up paying more.
• You may have trouble obtaining employment.

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Being Credit Smart Comes Down to

• Knowing your credit history affects your future.
• Knowing that credit cards are a loan that must be
  paid.
• Knowing the costs of using credit.
• Knowing how to build a credit history.
• Knowing that credit can be a great tool if its
  used properly.

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