Finance and financial system

Credit risks vs. benefits(Instructor Copy).

Benefits:

•  Having good credit makes it easier to rent an apartment and get service fromlocal utility companies. 

•  Good credit also gives the option of buying things now (like a sound system and cell phone) and paying the money back over time, rather than having to wait.

•  With good credit, it’s easier to buy what you want, when you want it. 

•  You have the 틱nancial exibility to make major purchases that take more money than you have on hand. 

•  Good credit is giving me the chance to act on life opportunities such as going to college. 

•  To avoid debt problems, never let your credit card debt exceed 20% of your yearly net income. Also, keep your credit card debt low enough so that your required payments are no more than 10% of my monthly income.

Risks:

•  Credit makes it too easy to spend—it can become a struggle to pay it back, and if you pay a few things late, you can lose money on late fees too. 

•  Not making loan payments can really hurt your credit record. You can miss out on an apartment or get turned down for a job because of it!

•  A low credit rating makes it tougher for me to get loans or credit the next time. Even if you’re able to borrow you’ll have to pay a higher interest rate.

Your credit report is the complete written version of your credit history. 

•  You should review your credit report at least once a year to check for errors or fraud and definitely before making a big purchase like a house or a car.

•  You give others permission to look at your credit report when you do things like fill out a credit card application or apply to rent an apartment.

•  Many landlords do a credit check to decide if they can count on you to pay your rent. And some lenders study your credit report to decide whether or not to offer you credit.

•  An employer might check your credit rating when you apply for a job. If you have a good credit score it shows them that you’re responsible—and more likely to be responsible on the job.