What is Credit?

•Credit – when goods, services or money is received in exchange for a promise to pay a definite sum of money at a future date.
•Why would a person want to use credit?


Obtaining Credit



Why would a lender assess a borrower’s creditworthiness before granting credit?


Paying Back Credit


Why would a lender charge a borrower interest?


Closed-end vs Open-end Credit




What Type of Lending Do Financial Institutions Provide?

•Closed-ended Credit
-Mortgage
   15 Yr or 30 Yr
-Home Equity Loan
-Car Loan
    3, 5, 6 Yr
-Student Loan
•Service Credit
- Cell, cable, internet
- Utilities

•Open-ended Credit 
- Line of Credit: a pre-established amount that can be borrowed on demand with no collateral from your bank.

- Bank Credit Card
  Visa, Mastercard, Discover

- Retail Credit Card
  Macy’s, American Eagle, Best Buy

What Type of Lending Do Financial Institutions Provide?

•Closed-ended Credit
-Mortgage
   15 Yr or 30 Yr
-Home Equity Loan
-Car Loan
    3, 5, 6 Yr
-Student Loan
•Service Credit
- Cell, cable, internet
- Utilities

•Open-ended Credit 
- Line of Credit: a pre-established amount that can be borrowed on demand with no collateral from your bank.

- Bank Credit Card
  Visa, Mastercard, Discover

- Retail Credit Card
  Macy’s, American Eagle, Best Buy

What is a Credit Card



Last modified: Tuesday, August 14, 2018, 8:30 AM