Credit and Debt

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A mathematical number created to help evaluate the risk with lending a consumer money.

Credit Score

Leah is trying to explain the difference between open‐end and closed‐end credit to her roommate. Which statement should she include in her description of closed‐end credit?

Equal payments are required on a regular basis until the loan is repaid.

Generally, high scores equal

Higher chance of credit repayment

Jake's credit application has been declined because of his negative credit history. Which statement is most likely to be true?

Jake has applied for 4 credit cards and a car loan in the past 6‐weeks

Jenny is 18‐years‐old and has applied for credit for the first time. Her credit application was declined because she has no credit history. What would you recommend Jenny do to begin to build a positive credit history?

Jenny should obtain a secured credit card.

Edward wants to develop a positive credit history. How should he do this?

Maintain reasonable amounts of available credit

Which of the following is NOT included in an individual's credit report?

Medical Info

Which is not a Credit Reporting Agency?

MidAmerican X no Equifax * Experian* TransUnion*

When may a person view his/her credit report for free?

Once a year, from each of the three main credit reporting agencies

How many free credit reports can an individual receive each year?

One from each of the three credit reporting agencies

A credit card is an example of which type of credit?

Open-ended credit

When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which statement best describes what this is likely to mean for Bryce?

The interest rates on his loan will be higher, since his credit score is low.

Tyler is trying to be responsible in using his new credit card and has heard there is a way to avoid paying interest on the things he charges. How can he LEGALLY avoid paying interest when using his credit card?

Tyler needs to pay the credit card balance in full every month before the due date listed on the credit card statement

Evan is writing a scholarship essay about the importance of responsible money management. He wants to explain the meaning of borrowing. Which statement below would explain the importance of understanding the process of borrowing money?

When you are borrowing, you are spending future income.

Lenders take into consideration if the borrower has used credit before, has paid bills on time and has good credit report. These are all part of the borrowers

character

Paying the minimum payment on a credit card every month will:

make the final amount paid substantially higher than the amount initially charged to the card


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