amp Understanding Credit This about what you JUST watched what is Rebeccas credit like How do you select a credit card How do you fix an issue if you see a fraudulent charge CREDIT DEFINITIONS ID: 532681
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Slide1
Confessions of a Shopaholic & Understanding Credit
This about what you JUST watched… what is Rebecca’s credit like?
How do you select a credit card?
How do you fix an issue,
if you see a fraudulent charge?Slide2
CREDIT DEFINITIONSCredit
Trust given to another person for future payment of a loan, credit card balance, etc.
2Slide3
What do you think Rebecca’s credit score would be?
She got into trouble because she didn’t really understand the Terms of her cards.Slide4
WHAT MAKES UP A TYPICAL CREDIT SCORE?
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Source: Fair Isaac and Consumer Federation of America, 2005
IMPROVING YOUR CREDIT SCORE
Pay bills on time.
Get current and stay current.
Don’t open a lot of new accounts too rapidly.
Correct mistakes.
Shop for loan rates within a focused period of time.
Keep balances low on revolving credit.
Pay off debt.
Check your credit report.Slide5
SHOPPING FOR A CREDIT CARDDECISIONS, DECISIONS...
ANNUAL FEE?
APR?
COMPUTATION METHOD?
GRACE PERIOD?
FINANCE CHARGE?
CREDIT LIMIT?
CARD INCENTIVES?
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TYPES OF CREDIT CARDSPrivate Label
Issued by a single source
Can only be used at a single source
Examples: Department Stores, Gasoline Companies
General Label
Issued by a single source
Can be used in many places
Examples: Bank Card, Major Credit Card
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QUESTIONS TO ASK WHEN SHOPPING FOR A CREDIT CARDAnnual fee
Annual percentage rate (APR)
Minimum payment (usually 3-5% of total balance)
Computation method (average daily vs adjusted)
Grace period (usually 21 days to pay balance, without interest added)
Finance charges Card incentives (any perks?)
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If you need help defining these words….
You may use Investopedia
http://www.investopedia.com/terms/f/finance_charge.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186
This link explains “finance charges”Slide8
Activity #1: evaluate cards
Intro APR ______% APR _____%
Fees:
Perks:
Credit Score needed?
Intro APR ______% APR _____%
Fees:
Perks:
Credit Score needed?
Intro APR ______% APR _____%
Fees:
Perks:
Credit Score needed?
You are going to RESEARCH the terms of some real cards, by completing Activity #1:
Click here…..
http://www.creditcards.com/top-credit-cards.phpSlide9
When you finish activity #1:
Continue with this slide show…
Let’s look at what happens when you don’t pay your balance each month or if you hit your credit limit.
What hurts your credit score?
What laws have your government passed to help you, as a borower?Slide10
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COSTS OF CREDIT
How much can credit cost? If you make only the minimum payment for an item, here are some examples of what you might actually pay and how long it will take you to pay it.Slide11
MEASURING THE SERIOUSNESS OF CREDIT TROUBLE SIGNS
Rate how serious you think each of the following trouble signs is.
1 = Not Serious 4 = Very Serious
Trouble Signs
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Delinquent Payments
Default Notices
Repossessions
Collection Agencies
Lien
GarnishmentSlide12
CREDIT SAFEGUARDS FOR CONSUMERSTruth In Lending Act
Fair Credit Reporting Act
Equal Credit Opportunity Act
Fair Credit Billing Act
Fair Debt Collection Practices Act
12Slide13
THE FAIR AND ACCURATE CREDIT TRANSACTION ACT One of the primary objectives behind the Fair and Accurate Credit Transaction Act (the FACT Act) is to help consumers fight the growing crime of identity theft. The following are some highlights of the Act.
Free credit reports
Fraud alerts and Active Duty alerts
Truncation: credit cards, debit cards, Social Security Number
Red flags
Disposal of consumer reports
Credit scores
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CORRECTING CREDIT ERRORSCircle the incorrect items on your credit report.
Write a letter to the reporting agency, telling them which information you think is inaccurate. Provide supporting documentation.
Send all materials by certified mail.
Send a similar letter to the creditor whose reports you disagree with.
The reporting agency will conduct an investigation.
If negative information is accurate, it can stay on your report for 7-10 years.
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CORRECTING CREDIT PROBLEMS
Take responsibility for actions.
Communicate with creditors.
Debt Consolidation
Credit Counseling
Bankruptcy
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