Credit Score
What is a credit score?
A 3 digit number that lets lenders know how reliable you are with paying back borrowed money.
What is a loan?
Borrowing money from someone (like a bank) that you promise to pay back later
The main difference between a debit card and a credit card is
With a credit card- you are taking out a loan for your purchase that you must pay back
With a debit card- you are using money directly from your checking account
What is one benefit of borrowing money from family or friends?
Friends and family will typically work with you to set up a repayment plan you can afford
What 2 main things does your credit score affect?
2. The interest rate
What is the word for the extra charge on a loan?
Interest
What can you build with a credit card but not a debit card?
Your credit score
What is one downside to borrowing money from family or friends?
It might cause problems in your relationships if you don't repay on time or if you then ask for even more money
What is a good credit score?
750+
The longer your loan term, the __________ you pay in total. The higher your interest rate, the __________ you pay in total.
More; more
If you do not pay back the money you used on your credit card within your billing cycle you get charged what 2 things?
Interest and possibly late fees
What is one tip when loaning money to friends?
2 things you can do to start building credit as a young person are
Get a cosigner
Start paying student loans
Get a secured credit card
Be an authorized user on a parent's/guardian's credit card
Define Principal
Define Loan Term
Principal- The amount you are borrowing
Loan Term- How long you have to pay back the loan
Only making the _____________ payment every month can lead you into large debt.
minimum
What are 2 other ways to help a friend besides lending them money?
Help your friend job search.
Be a listening ear.
Buy them groceries if they are in a tight spot.
Help them make a budget.
What are the 5 factors that impact your credit score?
1. Payment History
2. Mix of Credit
3. Capacity
4. Length of Credit
5. New Credit
When would you get a loan vs when would you use a credit card?
You normally get a loan for a big purchase.
You normally use a credit card to make a bunch of small purchases.
If you are under 18 and want to get a credit card, what should you do?
Can I afford this?