creditor
A business that gives you a loan is:
Obtain a car loan
Having a low credit score can make it more difficult to:
One credit report from each credit bureau
How many free credit reports are you legally entitled to each year?
Paying off your credit card bill
Which of the following actions would IMPROVE your credit score?
Payment History
Which of the following MOST influences your credit score?
You inquire about a credit card charge.
Which of the following actions has NO impact on your credit score?
You forgot to pay the cable bill.
Which of the following actions can NEGATIVELY impact your credit score?
Equifax
TransUnion
Experian
One of the big three credit reporting agencies
It can impact your ability to be approved for bank loans.
Having a good credit score is important because:
Credit scores reflect how likely individuals are to repay their debts.
Which statement about credit scores is TRUE?
$50
Oh no! Someone stole your credit card and charged $2,500 worth of purchases before you even knew the card was missing. How much of the unauthorized charges can you be required to pay?
APR and fees
You can best compare credit card offers by looking at these two features:
Add finance charges and late fees to your bill
You forgot to pay last month’s credit card bill. Your creditor will probably:
The smallest payment that will keep a credit card holder in good standing with the lender
Which of the following is the best definition of a minimum payment on a credit card?
Principle
When you borrowed $50 from your rich cousin, and then had to pay her back $60, what is the original $50 called?
D. It will probably be high
If you get your first credit card while you’re a full-time student, what can you expect about the card’s APR on outstanding balances?
Credit
When goods, services, or money are received in exchange for a promise to pay back a definite sum of money at a future date.
5 Cs of credit worthiness
Character, capital, capacity, collateral, and conditions.
Character
A person’s honesty and reliability, determined by their history of paying bills.
creditworthiness
A measure of your reliability to repay a loan.
capital
A person’s net worth and how much a person has in savings or tied to major assets
Capacity
Your Ability to Repay Debt…Can you make payments?
Advantages of credit
Convenient, you don’t have to use your own money right away, you can stretch amount owed into payments, etc.
Disadvantages of credit
Interest, credit card companies can try to trick you, minimum payments build up, you might end up paying more than you would if you just paid it in full up front, etc.
What are ways to establish good credit?
Paying bills on time, paying loans on time, having a longer history of using credit, etc.
What are ways to establish bad credit?
Not paying bills on time, choosing minimum payments, taking out loans for things that aren’t necessities, etc.
What is the past due amount?
The required amount not paid before the due date.
Minimum payment.
What is the amount that must be paid each month to avoid penalty fees?
Debit card
No interest, linked to a bank account, money is immediately taken from bank.
Credit card
Preapproved credit, charged now payed later, pay interest.
Interest
Price of borrowing money to make a purchase and pay later. Rates vary.
Annual percentage rate (APR) for purchases
Interest rate charged for amount borrowed per year.
Due Date
The day by which the company requires a payment to be made.
Late payment fees
Penalty fee for payments not made by the due date.
Fair Isaac Company (FICO)
The most common credit scoring system
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