How to maintain good credit?. Obtaining goods and services with a promise to pay for them from...

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