CREDIT 2 Credit Cards and Credit Measures

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CREDIT 2Credit Cards and Credit Measures

• More about it

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3 Cs of CREDIT

• Character
• - A persons reputation
• Capacity
• - A persons earning power and ability to pay
  debts from regular (historical) income
• Capital
• - Items owned or assets (amount of property you
  own outright)

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CREDIT APPLICATION

• EMPLOYMENT
• Where, how long, salary
• RESIDENCE
• How long sign of stability
• HOME OWNERSHIP
• Evidence of capital and permanence
• MONTHY HOUSING COST
• How much if left
• CREDIT REFERENCES
• Do you pay your bills?
• COLLATERAL
• Identify what you own
• BANK REFERENCES
• HOW MUCH IN THE BANK!

ARE YOU A GOOD RISK TO TAKE?!
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CREDIT - EQUAL CREDIT

• EQUAL OPPORTUNITY ACT
• Federal law ensuring that all consumers are given
  an equal chance to obtain credit.
• Protects against discrimination
• Gender
• Marital status
• Race
• Religion
• National origin
• Age
• Income from public assistance
• Anything else

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CREDIT REPORTING

• CREDIT BUREAU
• A reporting agency that collects information
  about he credit worthiness of consumers
• 3 Equifax, Experian, TransUnion
• CREDIT REPORT
• A RECORD OF A CONSUMERS TRANSACTIONS AND PAYMENT
  HISTORY
• IT SHOWS EVERYTHING GOOD AND BAD!

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CREDIT SCORE

• CREDIT SCORE
• A numerical rating based on credit report
  information, typically from 300 900
• 35 of the score is based on your payment history
  
• 30 of the score is based on outstanding debt
• 15 of the score is based on the length of time
  you've had credit
• 10 of the score is based on the number of
  inquiries on your report
• 10 of the score is based on the types of credit
  you currently have

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CREIDT cont

• Fair Credit Reporting
• Assures a consumers right to access their credit
  file and dispute incorrect information
• How often should we check our credit report?
• How do we make sure that our credit is not
  misrepresented?

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CREDIT

• How do we acquire credit if we have not credit
  history? (chicken or egg)
• Cosigner person with a strong established
  credit history how financially backs the
  borrower.
• What does this explain about interest rates?

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CREIDT CARD VARIATIONS

• Prestige / Status Cards
• gold platinum increased line of credit
  other benefits
• Co Branded Cards
• card network (visa, MC, etc) but another
  company (store)
• Affinity Cards
• Non-Profit / Charitable Organization
• Smart Card
• Computer Chip secure information password
  protected

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CREIDT

• TRUTH IN LENDING ACT
• REQUIRES CREDITORS TO ADEQUATELY INFORM CONSUMERS
  ABOUT CREDIT TERMS AND COSTS
• Does this mean that we will never be duped?
• Other credit tomorrow!!!!