Personal Financial Literacy-Credit and borrowing

The student understands the use of credit to make purchases. The student is expected to:

Compare and contrast sources of credit such as banks, merchants, peer-to-peer, payday loans, and title loans.

Compare and contrast types of credit, including revolving and installment credit, and collateralized loans versus unsecured credit.

Evaluate the impact of credit decisions on monthly budget, income statement, and net worth statement.

The student identifies factors that affect credit worthiness. The student is expected to:

Discuss how character, capacity, and collateral can adversely or positively impact an individual's credit rating and the ability to obtain credit.

Describe how to access and interpret a sample credit report and score.

Describe the importance of monitoring credit reports regularly and addressing mistakes.

Identify factors that could lead to bankruptcy such as medical expenses, job loss, divorce, or a failed business.

Appraise the impact of borrowing decisions on credit score, including consequences of poor credit management and bankruptcy.

The student evaluates a decision to use credit. The student is expected to:

Examine the components of the cost of borrowing, including annual percentage rate (APR), fixed versus variable interest, length of term, grace period, and additional fees such as late payment, cash advance, and prepayment penalties.

Explain strategies to reduce total cost of borrowing such as making a higher down payment and additional principal payments.

Differentiate between the use and cost of debit and credit cards.