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Credit and Debt Study Guide

Terms in this set (23)

What is a credit card and what does it do?
It is a short-term loan to allow you to purchase an item now that you can pay for later.
Describe the relationship between savers and borrowers at a traditional bank.
The bank pays interest to the savers and gives loans at a higher interest rate, so that the bank makes money.
Be able to give/identify an example of credit.
Taking out a mortgage to buy a home, automobile loan, personal loan, education or student loan.
What is secured debt?
It is debt that is backed by property, an example would be an auto loan.
How can you make your loan payments smaller?
Making a downpayment reduces monthly payment.
What is a fixed-rate mortgage?
It is a payment you owe every month and it will be the same every time.
What are the benefits of an installment loan?
It allows you to make one large purchase, even if you do not have all of the money upfront.
What is the difference between credit and debt cards?
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What is a Schumer Box?
It is a summary of the costs of a credit card. It is usually a box with all of that information on the credit card statement and it gives a clear description of APR, feeds and other major conditions of a credit card.
What is APR?
Annual percentage rate, it is the percent that thee credit card company charges you for the benefit of receiving a temporary loan from them.
What are the benefits of shopping with a credit card?
You get cash back, travel rewards, and there are other perks for each dollar you spend.
Know how to read a credit card statement
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Know how credit cards work with paying for things and paying off your credit card
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Know what your credit report is and how to read it
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How do you fix an inaccuracy on your credit report?
Locate receipts or proof, contact credit bureau, contact credit lender
What are the three credit card reporting agencies?
Equifax, Transunion, Experion
What affects your credit score?
Bankrupcy is an example that majorly affects the score.
What do lenders look at in your credit report/history? Who can look at your credit reports according to the Fair Credit Reporting Act?
Determine if you a trustworthy, assess current debt and see if you are managing to pay that off. Landlord, credit card company that you are trying to get a card from, potential employer that you gave permission to.
What do loan applications require?
How much money you make
Know strategies to pay off debt
Cut unnecessary spending and put that money toward debt.
What debt is typically the largest balance owed in most American Households?
Mortgage
If you stop making you debt payments what happens?
Unpaid debts will show up on your credit report
If you need help with debt repayment, who could you get in touch with?
Meet with certified credit counselor
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