Put together for my international students who do not understand our economy and what is needed to qualify for a loan. It also goes through the difference between credit and debit cards, and how not to get into financial difficulty.

1. Personal Finance
Understanding and
Managing Credit
© Craig Pickering 2013

2. Personal Budget
•2
Personal Budget
Income Weekly Monthly Expenses Weekly Monthly
Wage 1 -$ -$ Rent -$ -$
Wage 2 -$ -$ Food -$ -$
Other -$ -$ Transport -$ -$
Petrol -$ -$
TOTAL -$ -$ Insurance -$ -$
Clothes -$ -$
Entertainment -$ -$
Savings -$ -$
Net available -$ -$
TOTAL -$ -$

3.  Credit bureaus, credit reports, & your credit
score
 Correct use of credit cards
 How to manage your credit cards
 How credit cards work
 Costs involved

4. Credit Cards
O Credit Cards
O What type of credit card user are you (credit, convenience,
or both)?
O What types of cards do you have?
O What is the interest rate, calculation method, cash
advance costs, credit limit, etc. for each of your cards?
O Action Plan:
O Which card(s) should you have and why?
O What will you do to improve your credit card use?

5. O Credit Reports and Credit Score
O Have a copy of your credit score and credit report?
O Have you checked the credit report for mistakes?
O Action Plan:
O What is your plan to improve your credit score?
Credit Cards

6. Understanding Credit Bureaus,
Credit Reports, and Credit Scores
O Credit Bureaus
O Private organisations which maintain credit information
on individuals.
O Credit Reports
O Information collected by credit bureaus from
subscribers, creditors, public court records.
O Credit Scoring
O A numerical evaluation of your credit based on specific
criteria determined by the credit scoring company.

7. O Information on your Credit Report
O Personal demographics
O Age
O Tax File Number
O Addresses
O Employment history
O Credit history
O Criminal convictions and judgments
O Credit inquiries
Credit Bureaus, Credit Reports,
and Credit Scores cont.

8. Factors that determine Credit Worthiness
 Annual income
 Time at current residence
 Time at current job
 Age
 Employment
 Number of bank accounts
 Number of credit cards
 Credit history
Credit Bureaus, Credit Reports,
and Credit Scores cont.

9. O Getting your Credit Report
O You can get a free copy of your credit
O They send you a copy in the mail
Credit Bureaus, Credit Reports,
and Credit Scores cont.

10. Understanding Credit Cards and the
Correct Uses of those Cards
O What are credit cards?
O Credit cards are essentially open lines of credit
O Credit cards can be the single most destructive financial
instrument in your life!
O Why are they so destructive?
O Users do not understand them

11. Credit Cards (continued)
O Average debt per card holder is $4,700 ($3.6 billion
total)
O They pay over $800 per year in interest
O Interest rates can be as high as 20%
•11

12. Credit Cards (continued)
O What are the correct uses of credit cards?
O Guarantee / Emergency Use
O Hotel rooms, rental cars, emergencies, etc.
O Convenience
O Buying things over the internet
O Float/Timing
O Buy things before you pay for them
O Can take advantage of things on sale
O Free services
O Extended warranties, travel insurance

13. Credit Cards(continued)
O Problems with Credit Cards?
O It is too easy to spend money
O It’s easy to lose track of what you spend
O Interest costs are very high
O They are double to triple other funding sources
O You are obligating future income
O Debt limits future flexibility

14. Credit Cards(continued)
O Keys to Effective Credit Card Use:
O Know your goals
O Spend only on things planned in your budget
O Don’t go into debt
O Use your head!

15. Credit Cards(continued)
O Debit Cards
O What are debit cards?
O Debit cards are like a credit card but you are using your
money from your account.

16. Know How to Manage
Credit Cards and Open Credit
O Four key areas:
O 1. Reduce your balance
O 2. Protect against fraud
O 3. Be aware of trouble signs in credit card spending
O 4. Control your spending

17. Control Your Spending!
O Commit to always live on less than you earn
Earn $1 spend 99c = Comfortable
Earn $1 spend $1.01 = Poor