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Chapter 10 Credit Project

Consumer Ed. 7th hour

Andrew McGowan

on 12 November 2012

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Transcript of Chapter 10 Credit Project

Andrew McGowan Chapter 10 Credit Project The ability to borrow money in return for a promise of future repayment. Credit Reasons
People Borrow (reasons people need credit) To Buy Consumer items

(appliances, electronics,
vehicles, etc.) To Purchase Home

(allows you to build equity) To Pay for Their Education Rule of Thumb Your debt should NOT exceed 20-25%
of your net pay! (excluding housing costs) The 3 Cs Of Credit Character—is a measure of your sense of financial responsibility
Are you dependable?
Do you take your obligations seriously? Capacity—is a measure of your financial ability to repay a loan.
Do you have enough income to make payments?
How many fixed expenses do you have?
Are you already financially overextended? Capital—is the value of what you own.
(including savings, investments, and property)
Can you repay the loan? Never maintain more
than 2 credit cards Always shred important documents that are to be thrown away. How to avoid Identity theft. Credit Rating
is a measure of your credit worthiness
(credit score).
the better your credit rating, the easier
it is for you to take out loans Types
loans Secured Loan
"a loan backed by
something of value
pledged to ensure
payment" "Unsecured loan"
"a loan not backed
by collateral.
This is credit
based on your
alone" Credit Card Fees Annual Fees
"amount paid per
year to use the
credit card $15-100" Over Credit Limit Fee
"penalty amount you pay
if you go over your limit.
Usually $30 or more." Consumer Responsibilities Know your
debt capacity Consider Future
Credit Needs & Family It is important for people to use credit
wisely. Because if they borrow excessivley and are neglegent about their documents they could... Go Bankrupt Destroy your
Credit worthyness Live in a
cardboad box How i plan to use
credit in the future? To buy a house, a car, pay for the higher level education of what ever dependents i may have, and to futher my saving rewards and career needs as i see fit.
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