1 / 20

Pg.169-177

Pg.169-177. By: George, Esther, Malik, Tenasia and Tyshawna. The Five C’s of Credit. Character – Will you repay the loan. Are you trustworthy? The creditors want to know if your stable They may ask for personal or professional references to check

chaney-abbott
Download Presentation

Pg.169-177

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Pg.169-177 By: George, Esther, Malik, Tenasia and Tyshawna

  2. The Five C’s of Credit

  3. Character – Will you repay the loan • Are you trustworthy? • The creditors want to know if your stable • They may ask for personal or professional references to check • They might ask “Have you used credit before?”

  4. Capacity – Can you repay the loan? • If you can afford a credit card • Your income and debts will affect your ability to pay additional debts so your less likely to receive credit • The creditor might ask “Do you have other sources of income?”

  5. Capital – What are your assets and net worth • Capital is your amount of assists that exceed your liability or the debts your owe • Lenders want to be sure that you have enough capital to pay back a loan • If your lost your source of income by saving or selling your assets • A lender might ask “What are your liabilities?”

  6. Collateral – What if you do not pay the loan • Creditors look at the type of property or savings that you already have because they can be offered to secure the loan • If you fail to pay the loan the lender might take away what you pledge as collateral • A creditor might ask “What assets do you have to secure the loan?”

  7. Credit History – What is your credit history • Lenders might check your credit history to find out whether you’ve used credit responsibly in the past • The will get your credit report from a bureau • Credit rating – a measure of a persons ability to make credit payments on time • They might ask “Do you pay your bills on time?”

  8. Credit and equal opportunity

  9. Age • Equal credit act (ECOA) is very specific about how a persons age may be used as a factor for credit decisions • A creditor may not decline or drop your because of your age • They also might not close your account because of your age

  10. Public Assistants • You may not be denied because your receive public assistance • Certain information related to the source of income can be considered in determining your credit worthiness

  11. Housing Loans • The ECOA also covers applications for mortgages or home improvement loads • No discrimination against race or nationality of the people in the neighborhood where you live or want to buy your home a practice that is called redlining

  12. What if your application is denied? • If it is denied the ECOA tells you the reason • If it’s based on the credit report you will know why from the credit bureau

  13. Credit Report • When you apply for a loan the lender will review your credit history • Credit report is how well you pay back your loans • Collected by credit bureaus

  14. Credit Bureaus • Agency that collect information on how promptly people and business pay their bills • 3 major credit bureaus • Experian • Trans Union • Equifax • They get there information from banks, finance companies, stores, credit card companies, and other lenders

  15. Your credit file • Contains – name, address, social security number, birth date, your employer, position, and income etc. • Includes detailed credit information • Shows how many payments have been made, how much you owe, and how many payments you’ve missed

  16. Fair Credit Report • Vital to both creditors and consumers • Law requires deletion of out of date information and gives consumers access to their files as well as the right to correct any misinformation that the files may include

  17. Who can obtain a credit report? • May be issued only to identify persons for approved purposes • You may obtain a copy of your credit report free of charge if you have been denied credit

  18. Time limits on unfavorable data • It can be reported for only seven years • If you declare bankruptcy it can be reported for ten years

  19. Incorrect in formation • Credit bureaus are required to follow reasonable procedures to make sure that the information in their files is correct • If you challenge the accuracy of an item on your credit report the bureau must remove the item unless the lender can verify that the information is accurate

  20. Legal Action • You have the legal right to sue a credit bureau or creditor that has caused you harm by not following the rules established by the fair credit reporting act. • An unauthorized person who obtains a credit report under false pretenses may be fined up to 5,000 dollars imprisoned for one year or both.

More Related