Credit101

Hey, can I borrow some money and I will pay you back

later?

Credit is a promise to repay an obligation or debt.

What is “credit”?

A credit transaction occurs when one party agrees to loan

money to another party.

What is a “credit transaction”?

The first party is called the creditor or lender.

Who is involved?

The second party is called the debtor or borrower.

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.

What is a “credit history”?

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.

What is a “credit score”?

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.

What is a “credit bureau”?

EquifaxExperian

TransUnion

The Big 3

Together, they operate annualcreditreport.com where one can go to see their personal credit

score.

What does a credit score look like?

The FICO (Fair Isaac Corporation) score is simply a 3-digit number!

765 678 524

What determines you credit score?

35%

15%30%

10%

10%Payment HistoryCredit HistoryOutstanding DebtsNew CreditCredit In Use

Payment history is a record of delinquent payments, generally being

more than 30 days, will lower the credit rating.

What is “payment history”?

A credit history or credit reputation is a record of an individual or company's past

borrowing and repaying behavior.

What is a “credit history”?

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.

What is a “outstanding debt”?

New credit is when an institution takes a look at your credit report

because you applied for some type of credit opportunity.

What is a “new credit”?

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.

What is a “credit in use”?

Credit – the borrower’s willingness to pay.

What are the “3 C’s of Credit”?

Capacity – the borrower’s ability to repay the debt.

Character – the borrower’s stability.

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!

What are your rights?

It is recommended that an individual checks their credit report annually by either going to all 3 specific CRAs ($)

or by utilizing annualcreditreport.com.

Should you check your credit history?

Report it to the CRA immediately! They are required by law to

investigate any claim within 30 days.

What do you do if you find an error?

Savings Account Under the Mattress

Certificate of DepositMutual Funds

BondsStocks

Money Management!RISK:LOW

HIGH

REWARD:

LOW

HIGH

Are there any questions that you have before we

begin the project?

QUESTIONS?

Good luck!

Have Fun!

Be Creative!