Credit is a promise to repay an obligation or debt, and involves a creditor lending money to a debtor or borrower. A person's credit history and credit score are determined based on factors like their payment history, amount of outstanding debt, new credit applications, and credit utilization. The three major credit bureaus - Equifax, Experian, and TransUnion - collect credit information and provide credit reports and scores that impact a person's ability to access further credit opportunities.

1. Credit
101

2. Hey, can I borrow
some money and I
will pay you back
later?

3. What is “credit”?
Credit is a promise to repay an
obligation or debt.

4. What is a “credit
transaction”?
A credit transaction occurs when one
party agrees to loan money to another
party.

5. Who is involved?
The first party is called the creditor or
lender.
The second party is called the debtor or
borrower.

6. What is a “credit
history”?
A credit report or credit history is a
record of an individual's or company's
past borrowing and repaying, including
information about late payments and
bankruptcy.

7. What is a “credit
score”?
A credit score is a numerical
expression based on a statistical
analysis of a person's credit files, to
represent the creditworthiness of that
person. A credit score is primarily
based on credit report information,
typically sourced from credit bureaus.

8. What is a “credit
bureau”?
A credit bureau is a company that
collects information from various
sources and provides consumer credit
information on individual consumers for
a variety of uses.

9. The Big 3
Equifax
Experian
TransUnion
Together, they operate
annualcreditreport.com where one can
go to see their personal credit score.

10. What does a credit
score look like?
The FICO (Fair Isaac Corporation)
score is simply a 3-digit number!
765 678 524

11. What determines
you credit score?
Payment
10% History
Credit
10% 35% History
Outstanding
Debts
30% New Credit
15%
Credit In Use

12. What is “payment
history”?
Payment history is a record of delinquent
payments, generally being more than 30
days, will lower the credit rating.

13. What is a “credit
history”?
A credit history or credit reputation is a
record of an individual or company's
past borrowing and repaying behavior.

14. What is a “outstanding
debt”?
Outstanding debt is the most common
form of consumer debt. It is the unpaid
portion of a debt which may include
interest in addition to the balance.

15. What is a “new
credit”?
New credit is when an institution takes a
look at your credit report because you
applied for some type of credit opportunity.

16. What is a “credit in
use”?
Credit in use refers to the types of credit
accounts that you have. They include
revolving credit (credit cards and lines of
credit), loans, public records (bankruptcy or
liens) and collections from an agency.

17. What are the
“3 C’s of Credit”?

18. What are your rights?
The Fair Credit Reporting Act is designed to
protect consumers by ensuring that Credit
Reporting Agencies use reasonable and
confidential procedures, while providing
businesses with correct and complete
information!

19. Should you check
your credit history?
It is recommended that an individual checks
their credit report annually by either going to
all 3 specific CRAs ($) or by utilizing
annualcreditreport.com.

20. What do you do if
you find an error?
Report it to the CRA immediately! They are
required by law to investigate any claim
within 30 days.

22. Money Management!
RISK: REWARD:
LOW LOW
Savings Account
Under the Mattress
Certificate of Deposit
Mutual Funds
Bonds
Stocks
HIGH HIGH

23. QUESTIONS?
Are there any questions
that you have before we
begin the project?
Good luck!

24. Have Fun!
Be Creative!