Unit 4 PF

Everyone can obtain a free credit report once a year from each of the three main credit bureaus. It is

A good idea to obtain the reports and review them for accuracy and file a written complaint if the report contains mistakes.

The greatest advantage of using a credit card is that it provides

An easy way to establish a personal credit history.

. The best way to protect against identity theft is to

Check credit bureau personal credit reports regularly and keep Social Security card and PIN information in a safe place.

If a person has mounting credit card debt and cannot pay it down, the first thing she should do is

Contact each credit card company with which she has an account and try to negotiate new terms such as a lower interest rate.

Under what circumstance would it make financial sense for a person to make a purchase with an installment loan?

He is offered a job that requires him to have a car, which he can only afford to buy with a loan.

A person who has a total of $17,000 in credit card debt decides to use her house as collateral for a bank loan. She then uses her $30,000 home equity loan to pay off the credit card debt. She is now paying back one larger loan at a lower interest rate. What is the danger of using this method to pay back her debt?

If she cannot pay back the equity loan, she is in danger of losing her home.

Why should a person be very careful before agreeing to cosign a loan?

If the person does not pay bill other person will have to leaving the cosigner angry

When we say that a person with a home valued at $300,000 who has an outstanding mortgage of $100,000 has a lot of equity in her home, we mean that she

Owns a large fraction of her home.

A person with $5,000 in credit card debt with an 18.5% annual interest rate (APR) receives an end-of-year bonus of $2,000. It is generally considered a financially smart move for this person to

Pay off $2,000 of the credit card debt with the bonus so that he pays less in interest.

34. What are three (or more) ways to build a positive credit rating?

Pay off most recent cards, have a low credit limit, increase credit limit over time, pay bills on time,

Why is a payday loan considered to be an unwise way to finance a purchase?

Payday loans have extremely high interest rates and very high fees. They also tend to be harder to pay back, because they do not look at debt from past.

FICO scores are based on a model created by the Fair Isaac Corporation and weigh five major factors to determine the score. The action that would have the greatest negative impact on changing a person's FICO score is

Paying most bills on time and paying the minimum required each month.

purpose of the Equal Credit Opportunity Act is to

Protect consumers from the discrimination of granting or denying credit

What are three (or more) negative credit behaviors?

Spending more than you make, not paying your bills on time, going to a credit loan place.

Why is it possible that the interest rate advertised for a loan is very different from the annual percentage rate (APR) on that loan?

The APR includes loan application fees, credit report check, and other costs, in addition to the annual interest.

The information collected by credit bureaus such as Experian is accessible to

The person's potential employers, landlords, and lenders.

Why does a lender want information about a person's current cash inflow and outflow?

lender make a decision on the person's ability to pay back the loan. ... If the borrower defaults on the loan, the lender will expect to receive full payment from the cosigner.

. A disadvantage of paying for a car with a long-term loan is that

Toward the end of the loan, it is possible to owe more on the car loan than the car is worth.

A financial tool that provides people with revolving open-end access to funds that they can draw from repeatedly up to some preset limit is known as a

credit card

What is an advantage of having a high credit rating?

the more liable you are to find lenders willing to work with you and offer you lower fees