Throughout this course, you'll be faced with scenarios that test your knowledge of credit. If you answer correctly, you'll earn points and build your credit cred, but if you don't, you'll lose points. You'll start with 500 points of credit cred (shown in the upper-right-hand corner). The rest is up to you!
At the end of the course, you'll see how your credit cred affects your options and choices regarding what you can buy and how much you can spend. For example, your credit cred determines whether a lender will be willing to lend you money. Your credit cred also determines the interest rate you'll be charged for a loan. Imagine that you want to buy a car. Say you're willing to take a car loan for 48 months, and you calculate that you can afford to pay up to $250 per month. If your credit cred is exceptional, you might be offered a loan with a 5 percent interest rate. If you have very little credit cred, you may be offered a loan at 15 percent. What difference does it make? With a 5 percent loan, you could afford a car with a price tag of $10,850. With a 15 percent loan, you would have to settle for a car priced at no more than $8,965. That's nearly a $2,000 difference!
Jaden wants a new pair of boots bad! She’ll get a paycheck in three days, but will need to use most of her earnings to make her car payment. She already has a fairly new pair of boots, but these are just so cute.
Which of the following should Jaden do to protect her credit cred?
|A. Charge it! Those boots aren’t getting any less cute!|
|B. Borrow the money for the boots from her mom.|
|C. Save up for the boots.|
|D. Sell the iPod dock that she got for Christmas (but still hasn’t taken out of the box) to make money for the boots.|