Seminar Three Exercises
Do the following exercises from the textbook:
1. Are you considered a default risk? How would a lender evaluate you based on "the five C's" of character capital, collateral, and conditions? How could you plan to make yourself more attractive to a lender in the future? I do not believe I would be considered a Default Risk because I have a good credit score and I try to pay off what I spend on my credit cards that same month or fairly quickly so I don’t have to pay high interest rates. Based on the five C’s… Character-I would be considered as a good character due to employment, residential, and repayment history. Capacity- I try not to carry high balances on my credit cards, therefore, my debt obligation is fairly low. Capital-Capital would be considered mediocre due to my asset and collateral base. Collateral- I would no have much collateral because most of my assets are in my spouses name. Conditions-I may be considered a risk under conditions considering I work for the auto industry.
To make myself more attractive to a lender, I would probably use my credit cards more often and build up my credit history to make it stronger. I would also add my name to my spouses mortgage because he owned the home before he met me. I would also increase my income by working full-time opposed to part-time that way I could show that I would be able to afford to have a higher balance on my credit card.
2. Identify the last two items (consumer goods and durable goods) you purchased. Alternatively, select any two items you purchased during the last two months. Choose diverse items and analyze each item interms of the following factors:
a. Why did you buy that item? How did you decide what to get? I recently bought an Ipad and a new pair (good) of running shoes. I bought the Ipad basically for a portable electronic reading device and something I bring with to keep up with my school work...
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