1 (of 29) IBUS 302: International Finance Topic 10-Futures Contracts Lawrence Schrenk, Instructor.
1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.
-
Upload
hilary-doyle -
Category
Documents
-
view
214 -
download
1
Transcript of 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.
![Page 1: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/1.jpg)
1 (of 37)
FIN 200: Personal Finance
Topic 8-Credit ILawrence Schrenk, Instructor
![Page 2: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/2.jpg)
2 (of 37)
Learning Objectives
1. Discuss the sources and uses of credit in personal finance.▪
2. Explain how your credit score is calculated and how you maintain a good credit rating.
3. Describe how to avoid identity theft.▪
![Page 4: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/4.jpg)
4 (of 37)
Types and Sources of Credit
Three Types
TypeSpecific
PurchaseLong Term
Multiple Payments
Time Limit
Non-Installment ■ ■Installment ■ ■ ■ ■Revolving ■ ■
![Page 5: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/5.jpg)
5 (of 37)
Payments Patterns Interest then Principal
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
1 2 3 4 5 6
![Page 6: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/6.jpg)
6 (of 37)
Payments Patterns Interest and Principal Simultaneously
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Va
lue
1 27 53 79 105 131 157 183 209 235 261 287 313 339
Months
Amoritization Schedule
Monthly Interest Principal Repayment
![Page 7: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/7.jpg)
7 (of 37)
Possible Advantages of Credit
1. Purchase of expensive items
2. Emergency funds
3. Tax savings
4. Anticipate a price increase
5. Convenience
6. Delay payment without interest
7. Avoid carrying cash
8. Spending record
![Page 8: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/8.jpg)
8 (of 37)
Possible Disadvantages of Credit
1. Excess spending
2. Increased cost of purchase
3. Excessive debt
4. Increased monitoring
5. Identity theft
![Page 9: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/9.jpg)
9 (of 37)
‘Good’ versus ‘Bad’ Debt
Good Debt–Investment Home Education Car Improvements increasing value of home Borrowing at lower interest rate to reduce credit
card debt Bad Debt–Consumption
![Page 10: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/10.jpg)
10 (of 37)
Credit Bureaus, Ratings and Reports
![Page 11: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/11.jpg)
11 (of 37)
Credit Bureaus
Central Collection of Credit Information Three Main Credit Bureaus
Experian Equifax, and TransUnion (Credit Report Guide)
Independent May have different information and provide
different scores
![Page 13: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/13.jpg)
13 (of 37)
Credit Report, Part I
Identifying Information includes: Name Alias or AKA (Also Known As) Current and previous addresses Social Security number Telephone number Date of birth Current and previous employers
![Page 14: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/14.jpg)
14 (of 37)
Credit Report, Part 2
Credit History provides an ongoing historical and current record of a consumer's buying and payment activities, including accounts such as: Retail stores Banks Finance companies Mortgage companies
![Page 15: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/15.jpg)
15 (of 37)
Credit Report, Part 3
Public Records include: Tax liens Court judgments (including child support
judgments) Bankruptcies
![Page 16: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/16.jpg)
16 (of 37)
Credit Report, Part 4
Inquiries include: Regular inquiries: Credit grantors and other authorized
parties who have requested a copy of the consumer's credit report with a legally permissible purpose.
Account review inquiries: Credit grantors with whom a consumer has an existing relationship and who are permitted to periodically review the information.
Promotional Inquiries: Companies, with a legally permissible purpose, that have obtained certain limited information about a consumer, such as name and address, in order to send targeted, mutually beneficial firm offers of credit or insurance.
![Page 17: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/17.jpg)
17 (of 37)
Credit Score–FICO
Credit Score–FICO Median US score is 723 Range 300-850
![Page 18: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/18.jpg)
18 (of 37)
FICO–Payment History
Account payment information Credit cards, retail accounts, installment loans, etc.
Presence of adverse public records Bankruptcy, judgments, suits, liens, wage attachments, etc.
Severity of delinquency Amount past due Time Number of past due items on file Number of accounts paid as agreed
![Page 19: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/19.jpg)
19 (of 37)
FICO–Amounts Owed
Amount owing on accounts Amount owing on specific types of accounts Lack of a specific type of balance, in some
cases Number of accounts with balances Proportion of credit lines used Proportion of installment loan amounts still
owing
![Page 20: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/20.jpg)
20 (of 37)
FICO–Length of Credit History
Time since accounts opened Time since accounts opened
by specific type of account Time since account activity
![Page 21: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/21.jpg)
21 (of 37)
FICO–New Credit
Number of recently opened accounts, ... Number of recent credit inquiries Time since recent account opening(s)... Time since credit inquiry(s) Re-establishment of positive credit history
following past payment problems
![Page 22: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/22.jpg)
22 (of 37)
FICO–Types of Credit Used
Number of (presence, prevalence, and recent information on) various types of accounts Credit cards, Retail accounts, Installment loans, Mortgage, Consumer finance accounts, etc.
![Page 23: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/23.jpg)
23 (of 37)
Financial Impact of FICO Score
Calculator
![Page 24: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/24.jpg)
Your Credit Report
Get and check your free credit report from each agency at AnnualCreditReport.com.
Each credit report; one per year Do not use any other web site; do not get it
from the guy playing the guitar on the TV commercial!
24 (of 37)
![Page 25: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/25.jpg)
25 (of 37)
Further Information
Web Pages MyFICO.com
Pamphlets Understanding your FICO® score (MyFICO.com) Your Credit Scores (MyFICO.com) Credit Report Guide (TransUnion)
![Page 27: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/27.jpg)
27 (of 37)
Identity Theft–Why Worry?
Loss of Money Credit Score Weakened Difficulty Opening New Accounts Fraudulent Criminal Record
![Page 28: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/28.jpg)
28 (of 37)
Some Key Information
Social Security Number Driver’s License Number Bank/Credit Card Account Numbers PIN Numbers/Passwords Date of Birth
![Page 29: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/29.jpg)
29 (of 37)
Weak Points–Your Mail
Mailbox with Lock Outgoing Mail in Postal Box Shredder (Cross-Cut or Micro)
Mail with Personal Information ‘Pre-Approved’ Credit Applications
![Page 30: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/30.jpg)
30 (of 37)
Weak Points–Personal Information
Don’t Give Out Social Security Number Don’t Carry Social Security Card or Use it on
Checks, IDs, etc. Outgoing Mail in Postal Box Shredder (Cross-Cut)
Documents with Personal Information Keep List of Important Data
Account Numbers Telephone Numbers, etc.
![Page 31: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/31.jpg)
31 (of 37)
Weak Points–Computer
Avoid Obvious Passwords, e.g., Birthday Don’t Send Sensitive Information in E-Mails
Especially if Requested Suspect Links in E-Mail and Attachments Don’t Keep Passwords on your Computer Password Protect
Laptop, Flash Drives, Back-Up Drives Sensitive Documents
![Page 32: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/32.jpg)
Computer Software
Anti-Virus Anti-Spyware Anti-Spam Firewall MyIDProtector
32 (of 37)
![Page 33: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/33.jpg)
33 (of 37)
Active Measures Check Credit Card/Bank Account Statements
Regularly Online Check Credit Reports
www.AnnualCreditReport.com Consider Credit Monitoring Consider Identity Theft Insurance
NOTE: Terms, Coverage and Reimbursement Varies
Watch for the Unexpected: Credit Cards, Account Statements, Denials of Credit, etc.
![Page 34: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/34.jpg)
34 (of 37)
Further Information
Federal Trade Commission Identity Theft Resource Center (non-profit) Identity Theft and You (MyFICO.com)
![Page 36: 1 (of 37) FIN 200: Personal Finance Topic 8-Credit I Lawrence Schrenk, Instructor.](https://reader033.fdocuments.us/reader033/viewer/2022051618/56649cc55503460f9498f310/html5/thumbnails/36.jpg)
36 (of 37)
Ethical Dilemma
Rita is a medical office manager, and her brother, Juan has recently begun work for a health insurance company. Juan asks Rita if she will provide him with a list of all the doctors' patients who do not currently have health insurance, and she runs the list that includes names, addresses, telephone numbers, Social Security numbers, and brief medical histories. a. Is Rita acting ethically? Explain. b. What problems could Rita be creating for the practice's
patients?