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2.6.2.L1

Credit Basics Note Taking Guide

Total Points Earned
Name
Total Points Possible
Date
Percentage
Class

Managing Credit Responsibly

Credit is... Individuals must pay Credit availability

back... depends on...

a tool with many ingest on the

sources loan+ payment
for all of it

What are three credit sources?

credit card companies pawn shops government

Why are you spending future income when using credit?

you are Bowring money that not really yours

What are two examples of the purpose of credit What can happen if credit is not managed
providing long‐term benefits. responsibly?
investing your human capital with an
education loan create financial stress and negative
impact quality of life and financial
purchasing a vehicle to get from work and wellbeing managed responsible
back

© Take Charge Today – April 2014 – Credit Basics

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
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2.6.2.L1

What are three benefits to using money saved or invested instead of What is a disadvantage of doing
credit? this?
no contract
no interest your money could get stolen
you are not spending future income

Summarize why reading a contract carefully is important and what a person should consider.

are the term (such as interest rate) favorable

is the loan feasible both in the present and in the future
are the terms consistent for the life of the loan

Describe the recommended amount to borrow.

less than 20% of your income monthly payment should be less then 10% of monthly net
income

Types of Credit

Closed‐end Credit Open‐end Credit

Definition: Definition:
equal payment every months extended line of credit in advance

Features: Features:
outlining repayment terms singe oayment uneaule payments

Examples: Examples:
mortgage
car payment credit card
student loan

© Take Charge Today – April 2014 – Credit Basics

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
 Page | 16
2.6.2.L1

What are features of alternative credit?

higher interest rates usually has higher fees may combine elements of close and open-end credit

Describe each type of alternative credit.

Payday loan: you take 350 lender take 60

so you get 290

you buy and rent it and you pay 39 now but 4 thousands
Rent‐to‐Own: this time

you give them title of car and if you dont pay back they take the car
Title loan:

gives them something with 3 grand and 1500 for it and now
you can't pay it back
Pawn loan:

you get a refund of their taxes but 3 grand now, but you have to
Refund anticpation loan: pay it back then

Shopping for Credit

What is a credit What types of Why might a lender What is the trade‐off
application? information does it check a persons to no credit history
include? credit history? check?
a form
requesting person to see if the a higher inrested rate
information information person is truth
about a credit credit worthy
applicant requested
information

Why should a person shop around with different How could shopping around impact their credit
lenders? score?
terms of credit outlined in the contract ask make sure your conform with the leader and it saves
questions you money

© Take Charge Today – April 2014 – Credit Basics

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona