Thank you for the informative presentation on credit management. Managing credit wisely is an important life skill.

1. Managing
Credit
Mansfield
University TRiO
Melissa Wise
-First Citizens National Bank

2. Credit TOPICS
 Credit
 Credit Scores
 Using Credit Wisely
 Credit Cards
 Credit Programs

3. According to Citibank, “There are
presently 5 to 7 million Americans
who are financially
overextended.”

4. WHAT IS CREDIT?
 Credit is when goods,
services, or money is
received in exchange for
a promise to pay a
definite sum of money at
a future date.

5. CREDIT
 ADVANTAGES
 Convenient
 Useful for emergencies
 Often required to hold a
reservation
 Ability to purchase
expensive items sooner
 Eliminates the need to
carry large amounts of
cash
 DISADVANTAGES
 Paying interest
 Additional fees are
common
 Temptation to
overspend
 Can cause large
amounts of debt
 Identity theft

6. CREDIT SCORES
 What is a credit score or
FICO® score?
 A prediction of how likely you
are to pay your bills
 A number between 300 and
850 derived from many
different factors
 A number that drives the
approval of credit extensions
and the interest rate you pay
on those extensions

7. CREDIT SCORE
KEY FACTORS
 The FICO® scoring model looks at more
than 20 factors in five categories.
 How you pay your bills (35%)
 Amount of money you owe and the
amount of available credit (30%)
 Length of credit history (15%)
 Mix of credit (10%)
 New credit applications (10%)

8. RANGE OF CREDIT SCORES
 The following are some basic
guidelines for interpreting a credit
score:
 620 and below – Poor credit
 621-690 – Fair credit
 691-720 – Good credit
 721-750 – Good to excellent credit
 751-800 – Excellent credit
 801 and above – Nearly perfect credit

9.  Fair Isaac reports that
the American public’s
credit scores break out
along these lines:
CREDIT SCORE PERCENTAGE
499 and below 2 percent
500-549 5 percent
550-599 8 percent
600-649 12 percent
650-699 15 percent
700-749 18 percent
750-799 27 percent
800 and above 13 percent

10. You can check your credit
score for free up to three
times annually at
http://www.annualcreditrepor
t.com!!
 THINK OF YOUR CREDIT
REPORT AS A SECOND
RESUME!
 A credit report contains
information about where
you work, live, how you
pay your bills, whether or
not you have filed
bankruptcy and even if
you have ever been
arrested or sued.

11. USING CREDIT WISELY
For decades, society has promoted the idea of “BUY
NOW, PAY LATER.”
This is a good concept for some types of
purchases and a bad concept for many
other types of purchases.

12. USING CREDIT WISELY
 Good Credit Purchases
 Buying a house on credit is a smart move as home
values rise quickly and you can gain equity through
appreciation.
 Financing an education is a good investment in the
future. Your earning potential will eventually
outweigh the cost of tuition, and educational loans
are usually at a very low interest rate.
 Buying a car can also be a good credit purchase. It
is important to not get caught up in buying a car for
more than you can afford.

13. USING CREDIT WISELY
 Bad Credit Purchases
 Credit card debt and other consumer debt is the
worst type of debt. Interest rates and fees on
borrowing money this way will be the highest of all,
mostly because there is rarely a tangible item as
collateral.
 Financing a car for longer than the life of the vehicle
can also be an unwise credit decision.

14. CREDIT CARDS
 Credit cards are a great concept, but they end
up bringing financial ruin to many people who do
not use them properly.

15. TIPS WHEN USING CREDIT CARDS
 Never use credit cards as extra money. Always allocate
money from your current funds or monthly income in
order to immediately payoff whatever you finance.
 Read the fine print on the agreement to make sure you
are getting the best terms available.
 American consumers ages 20-29 carry an average of
$5,781 in revolving debt.
 This would take 11 years and 4 months to pay off assuming
an average interest rate of 13% and that minimum
payments are made.

16. Review…
 Please review these few websites before
proceeding…
 Open and browse them for subject matter in
order to use them as resources for completing
some credit questions.
 Web Pages:
 http://www.federalreserve.gov/creditreports/
 Read this story and draw from the examples given:
http://www.themintgrad.org/learn/lifestyle-planning/real-flc-life-
with-zero-debt/
 Short synopsis of why debt is costly:
http://www.americasaves.org/for-savers/set-a-goal-what-to-save-
for/debt-and-credit/get-out-of-debt/what-is-debt-and-why-is-too-
much-debt-costly

17. Apply…
 What is credit and what are the
advantages/disadvantages of credit?
 What are credit scores and how are they
determined?
 How can you use credit and credit cards
wisely?
 What is the average amount of revolving debt
of someone in their 20’s and why do you think
this is the case? Explain.
 What are the key factors of a good credit
management program?
***Please answer these questions in 3-4 complete sentences citing
the PowerPoint slide or website where the information pertaining
to the question was found***

18. Last but not Least…
 Take the lifeValues Quiz in the link provided:
http://www.smartaboutmoney.org/Tools-
Resources/LifeValues-Quiz.aspx
 Your results will educate you on your thought
process when you spend your own money. Please
provide some feedback and explain if you though
the quiz was correct in describing your thought
process during spending. (3 sentences minimum)