Credit Awareness for

Teens By: Amber Bratcher

Acceptable and

Unacceptable Uses

Wants Vs. NeedsWants- Something you can go without but still think you need it (Television, Phone, etc.)

Needs- Is something that you can not go without (Food, Water, etc.)

Delayed GratificationThis is when you want something and don’t have the money to get it right now so you delay getting it until you can afford it.

10 Ways to Avoid Debt

1. Have an emergency fund

2. Charge only what you can afford

3. Avoid any kind of balance transfers

4. Pay your balance in full each month

5. Don’t miss credit card payments

6. Know the signs of credit card debt

7. Avoid cash advances

8.Don’t lend your credit card out to others

9.Understand your credit card terms

10.Limit your number of credit cards

Costs Involved in Using Credit

Determining Interest Rates

You can determine your interest rates by using this formula I=PxRxT, where,

I= Interest P=Principal

R=Interest Rates (decimal number)

T= Time (number of years)

Hidden Costs

This is when the full cost of something isn’t included in the purchase price, because of additional expenses,

opportunity costs, unseen problems or unintended consequences. Hidden cost can make products appear lower priced, easy to obtain or a good value.

Credit Rating (Score), What Affects It?

Building Credit Worthiness

An assessment of the likelihood that a borrower will default on his or her debt obligations. It is based upon factors, such as his/her history of repayment and credit score. Lending institutions also consider the availability of assets and extent of liabilities to determine the probability of default.

5 C’s of Credit

Capital- Where you have to have money to borrow money

Capacity- is the money you personally have invested in the business and is an indication of how much you have at risk

Character-is the general impression you make on the prospective lender or investor

Collateral-additional forms of security you can provide the lender

Conditions- describe the intended purpose of the loan

Rights and Responsibilities of the Borrower and Lender

Understanding A Contract

When reading a contract make sure you read everything on the contract, you don’t want to skip anything when reading it because it is full with important information that can have an impact on your credit if not read carefully.

Identity Theft and Fraud

How does it Happen?

Identity Theft- Happens when;

1. Your wallet is stolen

2. Electronic files are hacked

3. Your personal information is stolen from the trash.

Identity Fraud- Happens when;

4. Your account information is used for purchases

5. New accounts are opened or insurance is purchased using your personal information

6. Your information is used for another crime

How to Prevent from Happening

To prevent it from happening to you use these steps;

1. Choose good passwords and pins

2. Protect your computer

3. Beware of phishing scams

4. Don’t just give away your personal information to anyone

5. Watch what you carry in your wallet

6. Shred any documents that you don’t need but have your personal information on them

7. Get a security freeze on your credit

8. Act quickly if you’re identity is stolen

If You’re the Victim, What do you need to do?What To Do Right Away:

Step 1: Call the companies where you know fraud occurred. Call the fraud department. ...Step 2: Place a fraud alert and get your credit report. Contact one of the three credit bureaus. ...Step 3: Report identity theft to the FTC. ...Step 4: File a report with your local police department.