can i, like, borrow 10 bucks?. credit: your best friend and worst enemy

Can I, Like, borrow 10

bucks?

CREDIT: Your Best Friend and Worst

Enemy

What is Credit?

• Credit is your reputation for financial responsibility

good credit means you pay stuff back on time

What is Credit?

• Credit is the time allowed payment

you can’t get credit (time to pay stuff back) without a good reputation (good credit rating) and you can’t get a good credit rating unless you develop a good credit history.

What is Credit?

• Credit is a source of revenue for banks

it’s how banks make money!

What is Credit?

• Credit is NOT more money, it is tomorrow's money

Credit is NOT free

• Think of credit as ‘renting’ the use of money.

• You have to pay INTEREST to the lender

PROS and CONS of using credit

• PROS • CONS

The Three C’s of Credit

• Character

• Capacity

• Capital

Character

• Your conduct and living habits

example:– Stability of residence,

employment

Capacity

• Can you earn enough to repay the loan?

Banks will take your income, and your expenses into account and decide whether or not you can afford to pay back the loan.

Capital

• What do you own?Banks are more likely to

lend money to people who can back things up with collateral.

Discussion Question

It can be said that credit is your best friend and

your worst enemy. What do they mean?

Credit Worksheet #1

Good Credit, Bad Credit and No Credit• Everybody needs good

credit.• The Credit Paradox:

I can’t get a loan because I have no credit, and I can’t get credit because I can’t get a loan!

Good Credit, Bad Credit and No Credit• To a bank NO CREDIT is

just about the same as BAD CREDIT

Your Credit Rating

• Credit Rating is:• a “score” that tells people

how well you pay stuff back.

• Most credit scores are computerized and accessible by any lender

Credit Rating is Determined by:

• Your payment history• Amount of debt carried• New accounts and

inquiries• What kind of credit is

used

The story of the filet knife

What Happened?

Page 2

Why is it difficult for young people to

get a loan?

What can you do to establish credit

worthiness?• Open a bank account and

save money• Apply for credit from a local

store (Dick’s, Circuit City Charge, Sears, etc) and use it correctly.

• Have a steady job (more than 1 year)

BLOG!

Analyzing Credit

• CORNELIA SMITH

Analyzing Credit

• FRANK FELDMAN