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Understanding Credit: The Importance and Impact on Your Financial Well-being

Learn about the positive and negative aspects of credit, the role of credit reports and credit scores, and how to improve your credit. Find out how credit affects your ability to borrow money and make important financial decisions.

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Understanding Credit: The Importance and Impact on Your Financial Well-being

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  1. Credit Check

  2. Introductions • INSTRUCTOR’S CONTACT INFO HERE • w/ logo were BANK ON logo is. Lesson resources provided by Federal Deposit Insurance Corporation, Purdue University Extension and University of Illinois Extension.

  3. Who loans money?

  4. Objectives • Understand what credit is • Learn the positive and negative aspects of credit • Increase knowledge of the role credit reports and credit scores play in your financial footprint • Increase knowledge of how to improve your credit report and score

  5. What’s the difference? Debt Credit Credit is your ability to borrow money. Money you borrow from a business or person.

  6. Why is credit important? • Useful in times of emergencies • Convenient when you do not have cash • Allows you to pay for large purchases over time • Helps you obtain employment, housing and insurance

  7. When is credit (debt)worth it to you?

  8. Is your credit in good shape? • Are these statements true for you? • I have seen my credit report before. • My credit report is accurate. • I maintain a credit score above 700. • I understand the cost of interest. • I know how long it will take to repay debt making monthly payments. • I know the total amount (principal + interest) of a loan I owe.

  9. What is a credit report? • It tells lenders: • Who you are • How much debt you have • Whether you have made payments on time • Whether there is negative information about you in public records

  10. What is a credit report used for? • To obtain loans and other credit • To get certain kinds of jobs • For housing – rental applications and mortgages • To pay less for insurance

  11. Check your credit report • Get a free credit report • from each of the 3 credit bureaus once a year • at • www.annualcreditreport.com

  12. Checking your report Make sure it is correct • Name and address • Social security number • Personal information • Is each account listed, a debt you owe? • Is the negative information correct? • Information listed under public information

  13. Credit repair scams • Provide you with a credit report for a fee • Fix bad credit notations and giving you credit identity • Offers to provide a service for payment up front

  14. Credit scores

  15. Credit build and repair • PowerPay • Secured credit cards • Credit building loans • Freezing credit – free in Indiana

  16. What’s the real cost?

  17. Want to buy a TV? • 1. You get an installment loan from a store that charges 29% interest. If you repay the loan in one year, how much will the TV cost? • 2. You decide to lease a TV, and your payments are $12 a week. How much money will you spend in a year for the TV? • 3. You save $12 a week. How many weeks will it take you to buy the TV with cash? • 4. The currency exchange down the street is an easy place to get a small-dollar loan. Why does it cost over $300 to pay for the TV? • 5. What is the cheapest of the four choices to buy the TV? • 6. If you wanted a new TV, what method would you use to pay for it?

  18. What’s the real cost?

  19. When you get home • Get your credit report & check accuracy • Check your credit score • Opt out of unsolicited credit offers

  20. Thank You! • INSTRUCTOR’S CONTACT INFO with logo HERE Interested in another class? Visit NIBOA.org. Lesson resources provided by Federal Deposit Insurance Corporation, Purdue University Extension and University of IL Extension.

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