Download 2017 MSW BW Public EP - Credit

Disclaimer: The views expressed are those of the presenter
and do not necessarily reflect those of the Federal Reserve
Bank of Dallas or the Federal Reserve System.
Why people get in trouble with Debt
• Unemployment, medical bills, or divorce
• Could not control spending, did not plan
for the future and did not save money
• Lacked knowledge of financial and credit
matters
Speaking of Interest
When you take out a loan, you repay the
principal, which is the amount borrowed, plus
interest, the amount charged for lending you
money.
BOTTOM LINE: Those who know about interest,
earn it; those who don’t, pay it
• Analyze debt and
develop a strategy
• Shop and negotiate for
the lowest rate on
loans
• Save interest expense
by paying off loans
earlier or choosing
shorter terms
Avoid Credit Card Debt
Pay cash
Set a monthly
limit on
charging
Limit the
number of
cards you have
Choose cards with
lowest rates and
no annual fee
Don’t apply in
order to get a
free gift
Steer clear of blank
checks companies
send you
Pay bills on
time
Credit Report
Shows all your payment history, plus late payments
A credit score predicts the likelihood that you will repay
on time
Credit scores range from 500-800+ and are determined by
payment history, debt and length of credit history
Factors not considered include age, race or ethnicity, income, job,
marital status, education, address or whether you own/rent
Components of Your Credit Score
Credit Scores
Too deep in debt…
• Discuss options with creditors before missing
a payment
• Seek expert help such as local Consumer
Credit Counseling Services
• Avoid “credit repair” companies that charge a
fee