Good Morning Sir, how may I help you today?
I would like to apply for a loan please.
Very good, and what kind of loan are you looking for?
I want a loan to buy a new home.
And how much were you hoping to apply for today?
I was hoping that I could apply for a $250,000 home loan.
First we just have to see if your credit is good enough for a loan that large.
I have a credit score of 760.
Excellent! And I also see on your credit report that you have always paid on time.
Yes, I know how important it is to pay your debts and pay them on time.
Will you be making a down payment on your new house?
I have ten thousand dollars available for a down payment and I would like to finance the rest.
I have just a few more questions for the application. What is your gross monthly income?
I make $750 a week, so I suppose my average monthly income would be about $3000.
How long would you like the life of the loan to be?
What are my options?
You can choose between a ten, fifteen, twenty or thirty year loan.
What is the difference between a fifteen year loan and thirty year loan?
A fifteen year loan will mean higher monthly payments, but you will pay less interest.
So a thirty year loan will mean lower monthly payments, but I will end up paying more in the long run?
That is right. Which would you prefer?
I think I would rather pay it off sooner and not pay as much interest.
Then we will sign you up for a fifteen year loan.
What is my interest rate?
Based on your credit report and excellent credit score, your interest rate will be 5.9%.
That is great! Where do I sign?
Just fill out this remaining paperwork and we will get you into your new home.
Good morning, I would like to apply for a credit card.
Wonderful! Please have a seat. Which credit card interested you the most?
I wanted to apply for a Mastercard please.
Alright, we can get started on the application. Are you currently working?
Why do you need to know if I am working?
The bank needs to know that you will be able to pay back your credit card.
Ok, I understand now. Yes I do have a job.
How long have you worked at your job?
I have been working with this company for two years.
And what is your gross monthly income?
I make $2500 a month before taxes.
Do you rent or own your home?
I rent an apartment.
What is the amount you pay for rent every month?
I pay $800 a month in rent.
Now I am going to check your credit report to find your credit score.
Why is my credit score important?
We use your credit score to determine how reliable you have been in the past.
Oh, so you want to know if I am good about paying my debts.
Exactly, and it looks like you have a credit score of 700.
Is that good enough to get a Mastercard today?
Yes, and because your score is high, we can also give you a low interest rate.
How will the interest rate affect my credit card?
The lower your interest rate, the less you will have to pay back the bank.
Very good! Is there anything else for me to do?
Just sign this form and you will receive your Mastercard in the mail in a few days.
I don’t know how I am going to pay off all of my debt.
Do you have a job?
Yes, but I don’t make enough money to pay all of my bills.
Have you considered filing bankruptcy?
What is that?
When you file bankruptcy, you are essentially wiping your financial slate clean.
That sounds too good to be true.
Yes, there are disadvantages to it.
What are the advantages first?
One of the advantages is that your creditors have to stop collecting from you as soon as you file.
That would be a big help right now.
Another benefit is that once it is all done, you will be able to start from scratch.
That is exactly what I need.
Yes but there are also some very bad disadvantages to filing bankruptcy.
What is the down side?
A bankruptcy goes on your credit report for up to ten years.
Why would that be a bad thing?
When you go to apply for future credit, it will be harder to obtain with a bankruptcy on your record.
So if I want to buy a house, I might not be able to do so?
Exactly, because creditors are more cautious with those that have filed bankruptcy.
I want my credit to be as good as possible.
Do you think you will be able to pay off your debts within five years?
If I am able to budget well with my current pay, then yes I could.
Then I wouldn’t suggest that you file bankruptcy.
You’re right, I will just have to be better with my money and pay off my debts.