10 Credit - Prentice-Hall, Inc. Today: Chapter 6 Using...

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Prentice-Hall, Inc. 1 Today: Chapter 6 Using Credit Cards: The Role of Open Credit Definitions and Examples of Credit z ________________ – receiving cash, goods, or services with an obligation to pay later. z ___________________ – credit that you can must repay in fixed payments { Examples – car loans, mortgages z ____________________ -- credit that you can use and repay at your pace so long as you pay the required minimum monthly payment. { Examples -- Credit cards or department store credit cards Factors That Determine Creditworthiness z Annual income z Length of time at current residence z Length of time at current job z Number of bank accounts z Number of credit cards z Credit history Getting a Credit Card: The Five Cs of Credit z Character z Capacity z Capital z Collateral z Conditions ____________ : sense of responsibility toward debt repayment z Proven debt repayment history z Job stability z Home ownership/rental length z Low debt load
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Prentice-Hall, Inc. 2 _____________ : ability to repay debt z Current level of income and source of income z Current level of borrowing (how many lines of credit do you currently have of credit do you currently have) z Level of non-obligated income z Debt including mortgage should be less than _________________ of your gross income (debt to income ratio) _____________ : size of your financial holdings z Investment holdings z Savings z Checking z Income z Assets _______________ : z Assets or property secured to obtain credit z The creditor holds the title or deed to the assets until repaid z
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This note was uploaded on 06/06/2011 for the course HACE 3200 taught by Professor B during the Spring '09 term at University of Georgia Athens.

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10 Credit - Prentice-Hall, Inc. Today: Chapter 6 Using...

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