Credit - Head Matters

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Introduction

If you have ever taken out a loan to buy something—a car, for example—you were given credit. Credit means you are using someone else’s money to pay for things. It also means you are making a promise to repay the money (the loan) to the person or company that loaned you the money (the creditor or lender). You’ll almost always be agreeing to pay interest as well – which is a percentage of the loan that the lender charges the borrower for the money that they are providing you to spend.

One definition of health is managing your lifestyle so that you avoid as many causes of disease as possible. Likewise, financial health is managing your finances and credit so that you avoid excessive debt. We cannot avoid all disease, nor can we avoid ever using credit, but we can avoid borrowing excessively. The key to financial health is to learn to understand how credit works and how to use credit for positive purposes. We’ll be exploring this world of loans, debts, credit cards, and consumer protections by examining the following objectives.

Our Credit course was developed in partnership with the Colorado Financial Planning Association, incorporating information from the Council for Economic Education.

Here's an outline of what we will cover in this course:

  1. Analyze the benefits and costs of consumer credit
    1. Explain the advantages and disadvantages of using credit
    2. Explain the difference in cost between cash and credit purchases
    3. Explain why lenders would be willing to make loans to some people and not to others
    4. Calculate the costs and benefits of borrowing to buy, given scenarios including purchase price and credit terms
    5. Calculate how long it takes to repay debt and the total cost when a borrower makes minimum payments
    6. Explain how credit card disclosure information affects borrowing costs
  2.  Compare sources of consumer credit
    1. Describe the advantages of a short-period loan versus a long-period loan
    2. Compare annual percentage rates and total credit costs for a given loan amount and timeframe from three different types of lenders
  3. Explain factors that affect creditworthiness and the purpose of credit records
    1. Credit report
    2. Credit scores
    3. Order a credit report
    4. Understand and check your credit report
    5. Correct an inaccurate credit report
  4. Identify ways to avoid or correct credit problems
    1. Describe indicators and consequences of excessive debt, such as skipping payments, juggling bills, and wage garnishment
    2. Identify ways negative credit report information can affect a consumer's financial future
    3. List possible actions a consumer could take in response to excessive debt
    4. Describe the negative consequences of bankruptcy
  5. Describe the rights and responsibilities of buyers and sellers under consumer protection laws

Current Course:
Credit

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