Unlocking The Confusion of Credit! Provided by: The Credit Education Bureau 585-256-6080
Keys to understanding credit: <ul><li>Why having good credit matters. </li></ul><ul><li>What is APR? </li></ul><ul><li>How...
The First Key: Knowing Why Good Credit Matters
Good Credit is the best way to prove to lenders you’re trustworthy. <ul><li>Having good credit is like having a 4.0 GPA. <...
Lenders Will Look at Three Things: <ul><li>How much you earn versus how much it costs you to live. </li></ul><ul><li>What ...
How do Lenders Figure it Out? <ul><li>They contact the credit bureaus. </li></ul><ul><ul><li>Agencies who compile your cre...
<ul><li>A Credit Report </li></ul><ul><li>4 Basic Elements </li></ul><ul><li>Personal identification </li></ul><ul><li>Pub...
The Good News… <ul><li>You Can Get a Copy! </li></ul><ul><li>Call one of the three major credit bureaus: </li></ul><ul><ul...
The Second Key: Knowing About APR
Figuring Out the Combination: <ul><li>APR = Annual Percentage Rate. </li></ul><ul><li>APR calculates The  total annual  co...
Here’s How APR Will Affect You: <ul><li>Lets say your credit card has an APR of 18% </li></ul><ul><li>You purchase a new c...
How Credit Cards Work “The Imaginary Card” <ul><li>Big Bank USA Mastercharge credit card. </li></ul><ul><li>$500 limit. </...
How Long Will it Take to Pay Off? <ul><li>Minimum Payment $10 each month. </li></ul><ul><li>9 years to pay off. </li></ul>...
How Long Will it Take to Pay Off? <ul><li>Twice the minimum payment $20 each month. </li></ul><ul><li>2 years and 8 months...
The Third Key: Knowing How to Use Your Credit Wisely
Everything You Need to Know, But Didn’t Know to Ask. Looking at the fine print!
What kind of APR am I being charged? <ul><li>Variable rate </li></ul><ul><ul><li>Changes as the economy changes </li></ul>...
What are the rules about fees? <ul><li>Fees are usually charged if a customer violates their agreement terms </li></ul><ul...
What is a “grace period”? <ul><li>It’s the period of time between your purchase and when your payment is due </li></ul><ul...
How is my minimum payment calculated? <ul><li>It’s different for each issuer </li></ul><ul><li>For the most part, it is 2%...
The Fourth Key: Knowing What Happens When…
…You’re late? <ul><li>Being as little as 30 days late can affect your credit </li></ul><ul><li>In most cases you will be c...
…You can’t even pay the minimum? <ul><li>They may suspend your charging privileges </li></ul><ul><li>They may turn you ove...
…You lose a credit card? <ul><li>The most they can hold you liable for is $50 of any unauthorized charges </li></ul><ul><l...
…You get charged for something you didn’t buy? <ul><li>You must dispute the item </li></ul><ul><li>Call or write your cred...
The Fifth Key: Knowing How To Protect Yourself.
Being Credit Wise: <ul><li>Understand the terms of your credit cards: APR, fees, fine print, etc. </li></ul><ul><li>Don’t ...
Also: <ul><li>Don’t give your account number out over the phone to callers you’re not familiar with </li></ul><ul><li>If y...
The Sixth Key: Knowing How Credit Card Companies Work The road to shopper awareness
Understanding The Industry: <ul><li>Networks </li></ul><ul><ul><li>Visa, Master Card, American Express, Discover </li></ul...
How Do They Make Money? <ul><li>By charging cardholders interest </li></ul><ul><li>By charging cardholders an annual fee <...
Final Summary <ul><li>Know that your credit history will affect your future. </li></ul><ul><li>Know the pitfalls of credit...
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"Unlocking the Confusion of Credit"

  1. 1. Unlocking The Confusion of Credit! Provided by: The Credit Education Bureau 585-256-6080
  2. 2. Keys to understanding credit: <ul><li>Why having good credit matters. </li></ul><ul><li>What is APR? </li></ul><ul><li>How to use your credit wisely. </li></ul><ul><li>The rules of the road: What happens when… </li></ul><ul><li>How to protect yourself. </li></ul><ul><li>How credit card companies work. </li></ul>
  3. 3. The First Key: Knowing Why Good Credit Matters
  4. 4. Good Credit is the best way to prove to lenders you’re trustworthy. <ul><li>Having good credit is like having a 4.0 GPA. </li></ul><ul><ul><li>Everybody trusts you. </li></ul></ul><ul><li>Having bad credit is like having a few F’s. </li></ul><ul><ul><li>Everyone can’t help but wonder. </li></ul></ul>
  5. 5. Lenders Will Look at Three Things: <ul><li>How much you earn versus how much it costs you to live. </li></ul><ul><li>What loans you already have or had. </li></ul><ul><li>If you pay your bills on time. </li></ul>
  6. 6. How do Lenders Figure it Out? <ul><li>They contact the credit bureaus. </li></ul><ul><ul><li>Agencies who compile your credit history information. </li></ul></ul><ul><li>The bureaus then supply a credit report. </li></ul><ul><ul><li>A transcript of your personal payment history. </li></ul></ul><ul><li>The credit report has a credit rating . </li></ul><ul><ul><li>A system developed to determine how credit worthy you are based on your history . </li></ul></ul>Credit report
  7. 7. <ul><li>A Credit Report </li></ul><ul><li>4 Basic Elements </li></ul><ul><li>Personal identification </li></ul><ul><li>Public records </li></ul><ul><li>Payment history </li></ul><ul><li>Inquiries </li></ul><ul><li>Reporting Periods </li></ul><ul><li>2 years - Inquiries </li></ul><ul><li>7 years - Negative information </li></ul><ul><li>10 years - Bankruptcy (CH. 7) </li></ul>
  8. 8. The Good News… <ul><li>You Can Get a Copy! </li></ul><ul><li>Call one of the three major credit bureaus: </li></ul><ul><ul><li>Experian: 800-422-4879 </li></ul></ul><ul><ul><li>Trans Union: 800-916-8800 </li></ul></ul><ul><ul><li>Equifax: 800-685-1111 </li></ul></ul><ul><li>Each copy is $8.50. </li></ul>
  9. 9. The Second Key: Knowing About APR
  10. 10. Figuring Out the Combination: <ul><li>APR = Annual Percentage Rate. </li></ul><ul><li>APR calculates The total annual cost of a loan. </li></ul><ul><li>APR consists of: </li></ul><ul><ul><li>The principal </li></ul></ul><ul><ul><li>The interest rate </li></ul></ul><ul><ul><li>The finance charges </li></ul></ul>
  11. 11. Here’s How APR Will Affect You: <ul><li>Lets say your credit card has an APR of 18% </li></ul><ul><li>You purchase a new computer for $750 </li></ul><ul><li>You only pay the minimum payment of $15 </li></ul><ul><li>The interest owed would be $12 </li></ul><ul><ul><li>The APR of 18% = 1.5% interest per month </li></ul></ul><ul><li>You still owe $747 </li></ul>
  12. 12. How Credit Cards Work “The Imaginary Card” <ul><li>Big Bank USA Mastercharge credit card. </li></ul><ul><li>$500 limit. </li></ul><ul><li>20% APR. </li></ul><ul><li>What would you like to buy? </li></ul>
  13. 13. How Long Will it Take to Pay Off? <ul><li>Minimum Payment $10 each month. </li></ul><ul><li>9 years to pay off. </li></ul><ul><li>$584 in interest. </li></ul>= =
  14. 14. How Long Will it Take to Pay Off? <ul><li>Twice the minimum payment $20 each month. </li></ul><ul><li>2 years and 8 months to pay off. </li></ul><ul><li>$152 in interest. </li></ul>= =
  15. 15. The Third Key: Knowing How to Use Your Credit Wisely
  16. 16. Everything You Need to Know, But Didn’t Know to Ask. Looking at the fine print!
  17. 17. What kind of APR am I being charged? <ul><li>Variable rate </li></ul><ul><ul><li>Changes as the economy changes </li></ul></ul><ul><li>Fixed rate </li></ul><ul><ul><li>You are given a precise number that doesn’t change without notification </li></ul></ul>
  18. 18. What are the rules about fees? <ul><li>Fees are usually charged if a customer violates their agreement terms </li></ul><ul><li>Companies may charge for things like: late payments, returned checks, or going over credit limits </li></ul>
  19. 19. What is a “grace period”? <ul><li>It’s the period of time between your purchase and when your payment is due </li></ul><ul><li>It’s also the period of time when no finance charges are added </li></ul>
  20. 20. How is my minimum payment calculated? <ul><li>It’s different for each issuer </li></ul><ul><li>For the most part, it is 2% to 3% of your balance </li></ul>
  21. 21. The Fourth Key: Knowing What Happens When…
  22. 22. …You’re late? <ul><li>Being as little as 30 days late can affect your credit </li></ul><ul><li>In most cases you will be charged a late fee </li></ul><ul><li>And it will be reported to the credit bureaus </li></ul>
  23. 23. …You can’t even pay the minimum? <ul><li>They may suspend your charging privileges </li></ul><ul><li>They may turn you over to their collection department </li></ul><ul><li>They may report you to the credit bureaus </li></ul><ul><li>Advice: Call the credit card issuer </li></ul>
  24. 24. …You lose a credit card? <ul><li>The most they can hold you liable for is $50 of any unauthorized charges </li></ul><ul><li>Call the credit card issuer </li></ul>?
  25. 25. …You get charged for something you didn’t buy? <ul><li>You must dispute the item </li></ul><ul><li>Call or write your credit card company </li></ul><ul><li>You can withhold payment on the disputed amount </li></ul><ul><li>You will not be charged interest if the dispute is correct </li></ul>Oops!
  26. 26. The Fifth Key: Knowing How To Protect Yourself.
  27. 27. Being Credit Wise: <ul><li>Understand the terms of your credit cards: APR, fees, fine print, etc. </li></ul><ul><li>Don’t leave credit card receipts in the open </li></ul><ul><li>Keep your issuer’s phone numbers in a file in case you lose your card </li></ul><ul><li>Check your statement each month for erroneous charges </li></ul>
  28. 28. Also: <ul><li>Don’t give your account number out over the phone to callers you’re not familiar with </li></ul><ul><li>If you get in over your head, call your creditors to make arrangements </li></ul><ul><li>Tear up pre approved credit card solicitations before throwing them away </li></ul>
  29. 29. The Sixth Key: Knowing How Credit Card Companies Work The road to shopper awareness
  30. 30. Understanding The Industry: <ul><li>Networks </li></ul><ul><ul><li>Visa, Master Card, American Express, Discover </li></ul></ul><ul><li>Issuers </li></ul><ul><ul><li>Banks and financial institutions (They carry the loan) </li></ul></ul>
  31. 31. How Do They Make Money? <ul><li>By charging cardholders interest </li></ul><ul><li>By charging cardholders an annual fee </li></ul><ul><li>By charging penalty fees: late payments, cash advances, etc </li></ul><ul><li>They charge stores for each sale </li></ul>
  32. 32. Final Summary <ul><li>Know that your credit history will affect your future. </li></ul><ul><li>Know the pitfalls of credit cards- APR, fees, penalties, etc. </li></ul><ul><li>Know how to protect your personal information. </li></ul><ul><li>Understand how the industry works. </li></ul>
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