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