Lesson 2:
Credit Introduction
Handout 4
Lecture Notes: Using Credit Wisely
Types of Credit
Single-Payment Credit
Pay in a single payment within a given time period
Examples: Doctors, utilities, paycheck lenders
Installment Credit
Pay in two or more regular payments of a set amount
Examples: Cars, mortgages, furniture, vacations
Revolving Credit
Buy within a credit limit – minimum due regularly
Examples: Retail charge accounts, credit cards
Credit Reports
- Record of your credit history - Sent by businesses, etc.
- Three credit bureaus: Experian, Trans Union, & Equifax
- Can affect: purchase power, job, and even insurance rates
How Much Can You Safely Borrow? (The 20-10 rule)
20: Never borrow more than 20% of yearly net income
10: Monthly payments should be less than 10% of monthly net income
**Mortgages don’t count
Handouts:
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