# THE CREDIT

## ADVANTAGES AND DISADVANTAGES OF USING CREDIT

1.-Purchase Power and Ease of Purchase

2.-Protection of Purchases

3.-Building a Credit Line

4.-Credit Card Benefits

2.-High Interest Rates and Increased Debt

3.-Credit Card Fraud

## HOW DO YOU CALCULATE THE COST OF CREDIT

The cost of credit formula is a calculation used to derive the cost of an early payment discount. The formula is useful for determining whether to offer or take advantage of a discount. The formula can be derived from two perspective.

EXAMPLE

1. Subtract the discount rate from 100%. For example, if a 2% discount is offered, the result is 98%. Then divide the discount percentage by 100% less the discount rate. To continue the example, this is 2%/98%, or 0.0204.
2. Multiply the result of each of the preceding steps together to arrive at the annualized cost of credit. To complete the example, we multiply 0.0204 by 18 to arrive at a cost of credit of 36.7% for terms that allow a 2% discount if paid within 10 days, or full payment in 30 days.

## GRANT CREDIT

The federal government does NOT provide grants for starting and expanding a business.Government grants are funded by your tax dollars and therefore require very stringent compliance and reporting measures to ensure the money is well spent. As you can imagine, grants are not given away indiscriminately.

## CREDIT DOCUMENTS

These documents will support the information you’ve provided in your refinance application. Let’s take a look at the types of documents your mortgage banker will be asking you to provide.

1.-Pay stubs

2.-W statements from the past two years.

3.-Tax returns.

4.-Proof Of Your Income

## CREDIT DOCUMENT

A letter of credit guarantees payment of a specified sum in a specified currency, provided the seller meets precisely-defined conditions and submits the prescribed documents within a fixed time frame. These documents almost always include a clean bill of lading or air waybill,commercial invoice , and certificate of origin

## WHY IS IMPORTANT TO KNOW THE USES OF DIFFERENT CREDITS

ITS IMPORTANT BECAUSE THAT CAN HELP YOU IN THE FUTURE

TO HAVE MORE CREDIT OR EARN MORE MONEY

OR JUST BECAUSE THAT CAN HELP TO MAKE YOUR CREDIT LOOKS BETTER

BUT YOU HAVE TO LEARN HOW TO USE EACH CREDIT CORRECTLY