Lenny and Leanne have been dating for over a year and moved in together three months ago. Lenny spends all his time and money on video gaming and buying the latest equipment. You have concerns for Leanne and the impact that Lenny’s lack of control over his finances may have on her. You are also concerned for her credit score as the bills (and lease agreement) are in both their names. Leanne knows little about finances and has turned to you for help as you have taken FINA 200. Use information from the case in your responses.

 

Leanne:

• attends Concordia full-time
• is living pay cheque to pay cheque with her part-time job and paying for her schooling 
• works 20 hours/week earning $17/hour working at Starbucks
• has managed to save $40 a pay cheque for a total of $800 in her bank’s savings account 

 

Lenny:

• attends McGill full-time
• has not paid his half of the rent for June and July (Leanne was not aware that Lenny had not paid his share of the rent for the second consecutive month, it was only when the landlord showed up at their door threatening them for payment that Leanne discovered the non-payments and quickly transferred the money from her savings account to the landlord)
• has maxed out his two credit cards with the purchase of additional video games; he is however not worried as he has applied for another credit card
• not currently working as his parent’s pay for his schooling, bills and entertainment (Leanne knows that his parent’s are getting frustrated as they keep asking Lenny for a budget so they know how much to transfer him on a monthly basis but Lenny tells them that a budget is a waste of time as his spending needs change all the time) 

 

1. Lenny thinks Leanne worries too much about finances and that as a student, banks are more understanding on credit scores. Once he graduates from engineering from McGill, he says the banks will “love him” and is not concerned about credit. Is Lenny correct and give your reason to support your response. (1 mark-.5 marks each)

 

You will need outside research; the government link below may be helpful with regards to credit reports and credit scores: https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html

1. Yes or No (highlight and underline your response) 
2. Reason:________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

2. You are more concerned about the impact on Leanne resulting from Lenny’s careless behaviour with his finances. Based on the information provided, give two potential impacts on Leanne. (1 mark-.5 marks each)

 

1. Impact:________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

2. Impact:________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

3. Leanne forced Lenny to order his credit report. Lenny knew he was in trouble but did not know which Credit Bureau to order from so he quickly ordered credit reports from both: 

________________________or ____________________. (.25 marks)

 

4. Lenny believes that ordering his credit report will now impact his credit score, especially as he ordered from both Credit Bureaus! Let Lenny know whether you believe this to be true or not. Explain to Lenny what “soft hits” and “hard hits” are regarding credit queries. 

(1 mark-.5 marks each)

1. True or False (underline and highlight your response)
2. Response:_____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

5. Give four (4) factors that may affect a credit score. (1 mark-.25 marks each)

 

1. ____________________________________________________________________
2. ____________________________________________________________________
3. ____________________________________________________________________
4. ____________________________________________________________________

6. Lenny was thrilled once his credit reports finally arrived as both had credit scores of 390 under the Beacon Score Range. Lenny felt that anything over 100 was fantastic! Explain to Lenny what this score represents. (1 mark)

Response:______________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

7. Give three (3) ways that Lenny can improve his credit score: (.75 marks -.25 marks each)

1. _______________________________________________________________________
2. _______________________________________________________________________
3. _______________________________________________________________________

 

8. Lenny is looking to enter a video gaming tournament and needs $1,000. He is going to the bank tomorrow and has asked Leanne to co-sign the loan (as he knows his parents will ask too many questions if he asks them for the money). Explain to Leanne what “co-signing” means and your recommendation. (1 mark-.5 marks each)
   • Yes recommend or No do not recommend (underline and highlight your response)
   • Response:_____________________________________________________________________________________________________________________________________________________________________________________________________________________