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Credit

T008-05.01. Credit. 8.05 Examine bankruptcy and credit laws. G70. Your Credit. T008-05.02. Credit Bureau An agency that collects information on how promptly people and businesses pay their bills.

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Credit

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  1. T008-05.01 Credit 8.05 Examine bankruptcy and credit laws. G70

  2. Your Credit T008-05.02 • Credit Bureau • An agency that collects information on how promptly people and businesses pay their bills. • Information retrieved from banks, finance companies, stores, credit card companies, and other lenders. • Building Credit • Open a checking or savings account • Apply for a local department store credit card. • Take out a small loan from your bank. • Pay all loans and credit card bills on time. G71

  3. Handling Credit Problems T008-05.03 • Credit Counselor • Helps consumers with credit problems. • Consolidation Loan • Combines all your debts in order to make one monthly payment on several different loans or credit cards. G72

  4. T008-05.04 Handling Credit Problems continued • Credit Services • Consumer Credit Counseling Service • Nonprofit organization that provides debt counseling services for families and individuals with serious financial problems. • Debt Repayment Plan • Reorganizes debt and sometimes includes renegotiating terms of debt. • Creditors will often accept such arrangements for partial payment, rather than not be repaid. G73

  5. What if you are denied credit? T008-05.05 • The Equal Credit Opportunity Act says: • You have the right to know the reasons. • You are entitled to know what specific information in the credit report led to your denial. • No fee will be charged if you state why you are requesting a copy of the report. • You are entitled to ask the credit bureau to investigate any inaccurate or incomplete information and correct your records. G74

  6. Truth-in-Lending Laws T008-05.06 • Requires that you be told the cost of a credit purchase in writing before you sign a credit agreement. • Protects consumers against unauthorized use of credit cards. • Limits your liability to $50 for unauthorized credit card purchases made prior to notification of the issuer. G75

  7. Usury Laws T008-05.07 • Restricts the amount of interest that can be charged. G76

  8. Equal Credit Opportunity Act T008-05.08 • The credit application can be judged only on the basis of financial responsibility. • Cannot discriminate based on gender, age, ethnicity, or religion. • Allows only three reasons for denying credit: • Low income • Large current debts • Poor record of making payments in the past G77

  9. Fair Credit Billing Act T008-05.09 • Requires creditors to correct billing mistakes brought to their attention. • Requires creditor to inform consumers of steps they need to take to get the error corrected. G78

  10. Fair Credit Reporting Act T008-05.10 • Gives consumers the right to know what specific information credit bureaus are providing to potential creditors, employers, and insurers. G79

  11. Fair Debt Collection Practices Act T008-05.11 • Protects consumers from collection agents. • Collection agents: • Must identify themselves. • Cannot tell others about the debt. • Cannot harass debtor. G80

  12. Federal Trade Commission(FTC) T008-05.12 • Enforces laws on credit. G81

  13. Bankruptcy T008-05.13 Legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts. G82

  14. T008-05.14 US Bankruptcy Act of 1978 • Chapter 7 (Liquidation) • Draw up a petition listing assets and liabilities. • Most of the debtor’s assets are sold to pay off creditors. • Cannot release debt on alimony, child support, taxes, fines, educational loans, and court fees. • Chapter 11– (Reorganization) Businesses Only • Chapter 13 • Propose a plan for using future earnings and assets to eliminate debts over a period of time. G83

  15. Effects of Bankruptcy T008-05.15 • Kept on file with credit bureau for 10 years. • Affects credit rating, future extensions of credit, loss of jobs, etc. G84

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