Transcript No Slide Title

$100 $100 $100 $100 $100 $100
$200 $200 $200 $200 $200 $200
$300 $300 $300 $300 $300 $300
$400 $400 $400 $400 $400 $400
$500 $500 $500 $500 $500 $500
For $100
The original
amount that you
borrow from a
creditor...
What is
Principal
For $200
The amount a
borrower pays to
use the creditors
money...
What is
Interest
For $300
A record of a borrowers
personal financial
transactions….
What is
Credit
Report/History
For $400
The formula
for calculating
simple
interest….
What is
I=PxRxT
For $500
The 3 credit
bureaus in the
U.S….
What is
TransUnion
Equifax
Experian
For $100
A number that
reflects a
borrowers credit
worthiness based
on the 5 C’s….
What is
Credit Score
For $200
The length of time a
borrower has before
interest begins
accumulating on a
credit card…
What is
Grace Period
For $300
The length of time a
borrower has to pay off the
amount borrowed….
What is
Loan Term
For $400
When personal
information is used to
make purchases,
withdraw cash, or set up
new accounts w/out your
permission….
What is
Identity Fraud
For $500
When credit card
companies
increase your APR
for making a late
payment….
What is
Universal Default
aka default APR
For $100
The amount you
must pre-pay to
get better rates for
loans…
What is
Downpayment
For $200
A fee charged
once per year
for the use of
some credit
cards…
What is
Annual Fee
For $300
The dollar amount
of interest a
borrower must
pay…
What is
Finance
Charge
For $400
A fee for using your
credit card as a
source of withdrawing
cash from an ATM
What is
Cash Advance
Fee
For $500
Associated with
mortgages – the
fee for setting up
the loan and other
expenses…
What is
Closing
Costs/Origination
Fees
For $100
• Provided by banks, credit
unions
• No payoff date
• Has a limit
• Monthly minimum payments
• Highest rates
• Credit Cards…
What is
Revolving
Credit
For $200
• Provided by banks and credit
unions
• Repaid over 10-30 yrs
• Payments are set for life
• Provides a tax break on interest
paid
• May refinance for lower rate for a
fee…
What is
Mortgage
For $300
• Offered by Federal Gov’t,
banks, credit unions
• May have deferred payments
for 6 months
• Terms vary
• Tax break for interest paid…
What is
Student Loans
For $400
Provided by banks, credit unions
Used for large purchases
Terms vary
Lower rate than CC
Repay loan & interest in a set #
of equal payments
• Payoff date/maturity…
•
•
•
•
•
What is
Installment
Credit/Closedended Credit
For $500
• Pay in full each month
• Phone service, electric,
medical bills
• May require a deposit
• Interest/late fee not
charged if paid in full on
due date
What is
Single-Payment
or Service
Credit
For $100
The rule to follow to
see what you can
afford for monthly
payments or total
outstanding debt…
What is
70/20/10 Rule
For $200
If Tommy has a monthly net
income of $2560 – what is the
maximum amount he can
afford per month in debt
payments….
What is
$256/per month
For $300
If Susie has a net
income of
$4500/month, what is
the maximum
outstanding debt she
should have…
What is
$10,800 of
outstanding total debt
For $400
If Jeni has net income of
$2600/month and the following
expenses:
• Rent $450
• Car payment $125
• Credit card payment $75
• Insurance payment $50
How much more debt can she afford
per month….
What is
$60.00
additional
monthly debt
payments
• Tory has monthly gross income of $3400 and
pays 25% in taxes
• Alicia has monthly gross income of $2500
and pays 23% in taxes
• They pay $800 for a mortgage/month
• Combined student loans of $175/month
• Car payments of $150/month
• Insurance premiums of $175/month
• Credit card payments of $50/month
HOW MUCH MORE IN MONTHLY DEBT
PAYMENTS CAN THEY AFFORD AND
HOW MUCH OUTSTANDING DEBT SHOULD
THEY HAVE TO BE IN A SAFE DEBT LOAD…
What is
$72.50 more in
monthly debt
payments
$10,740 in total
outstanding debt
For $100
• Will you repay the debt?
• Have you used credit
before
• How long have you lived
at your current address
• How long have you been
at your current job
What is
Character
For $200
• Can you repay the debt
• Do you have a steady job
• What is your salary
• What other loan payments
do you have
• How many dependents do
you have
What is
Capacity
For $300
Lenders consider what
possessions you can use to
make loans less risky for
them
Car, real estate, or other
liquid assets…
What is
Collateral
For $400
Lenders may be more
lenient about past credit
troubles if you can prove
you are moving past a bad
experience such as ID Theft
or unemployment...
What is
Conditions
For $500
List the 5 C’s of
Credit
What is
• Character
• Capital
• Capacity
• Collateral
• Conditions
What does the
abbreviation, FICO,
stand for?
Fair
Isaac
Company