Chapter 5

In-Class Notes

Background on Credit• Types of credit: instalment and revolving

open-end credit• There are advantages and disadvantages to

using credit• Credit history: your history with credit

instruments such as credit cards and lines of credit

• Credit insurance: a commitment to cover credit payments

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Credit Bureaus• Create credit reports• Create credit scores, or BEACON scores,

which record:• Your credit payment history (35%)

• The amount of credit you use (30%)

• The length of time you have had established credit (15%)

• The types of credit you have established (10%)

• The number of credit inquiries you make (10%)

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Credit Cards• Owning a credit card involves:

• An application process

• A credit limit

• Fees and incentives

• Cash advances and financing, in some instances

• Keeping track of credit card statements

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Tips on Using Credit Cards• Use a credit card only if you can cover the

bill

• Impose a tight credit limit

• Pay your credit debts as promptly as possible

• Reduce your credit spending if necessary

• Avoid credit repair services

• File for bankruptcy if you become insolvent5-5Copyright © 2009 Pearson Education Canada

Identity Theft and Identity Theft Tactics• Identity theft: occurs when an individual uses personal,

identifying information unique to you (e.g., your Social Insurance Number) without your permission for their personal gain

• People can steal your identity by:

• Shoulder surfing, dumpster diving, and skimming

• Pretexting, phishing, and pharming

• Abusing legitimate access to records

• Participating in crime rings and mail theft

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Protecting Against Identity Theft and Response to Identity Theft• Know the party to whom you are giving personal

information• Carry a minimum amount of ID• Keep personal information in a safe place• Report identity theft to the police• Cancel items such as your bank accounts, credit

cards, and driver’s licence• Advise your utility companies and financial

institutions of the theft

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