Credit

What is included in a credit report?

any public info, lawsuits, promotions, files for bankruptcy, and failed property taxes

When borrowing money, why does a finance company charger a higher interest rate than a bank or credit union?

as a form of protection (bigger risk being taken on them)

What is a credit bureau?

business that has your credit info on file

What should be done if there is an error on your credit report?

contact the bureau in writing

What is revolving credit and give an example?

credit that is renewed as debts are paid off. Credit cards

Who are the subscribers to a credit bureau?

creditors

What are three ways you can keep your credit information safe when buying online?

deal with companies you know and trust, use a https: website, initiate all transactions yourself on sites you trust

What are three things you can do to keep your credit card safe?

destroy expired cards, keep receipts and verify statement charges, and do not leave them lying around or lend them

Annual Fee

fee charged yearly for having a credit card

Where does a credit bureau get its info?

from business you have credit with

What are three things that will negatively impact your FICO score?

hard inquires, missing payments, and opening to many accounts

What are two examples of service credit?

hospitals and dry cleaners

Finance Charge

interest paid for the use of credit

Pawnbroker

legal business that makes high-interest loans based on the value of personal property as collateral

Credit

money borrowed to buy something now and pay for it later

What are the 3 provisions of the CARD Act of 2009?

no more universal default, limits interest rate hikes, clearer due dates

Where can you go to get a free credit report? How often can you get one?

Annualcreditreport.com and once a year from each of the three bureaus.

What are the 3 C's of credit?

Character, Capacity, and Capital

What are two advantages of credit?

Convenient (instant cash) and helps build credit line

Why do retail stores accept Visa and MasterCard along with their own store card?

To expand client base and so that they don't lose money

What is a cash advance on a MasterCard or Visa?

allows you to withdraw money from ATM. you get charged on each purchase. (high)

Open-Ended Credit

an agreement to lend the borrower an amount up to a stated limit and allow borrowing up to that limit again, whenever the balance falls below the limit

What are the three things you should consider when deciding on what credit card to apply for?

APR, annual fees, and benefits

Service Credit

agreement to have a service performed now and pay it later

What is a credit report?

written record of your borrowing and repayment performance

What is a FICO score?

your credit rating (creditworthiness)

lol skip dis

...hah

What are the three credit bureaus?

Equifax, Experian, and Trans Union

What are the 5 categories that are used to calculate you FICO score?

New credit, Length of credit history, credit mix, payment history, and amounts owed.

If you are no longer going to use a credit card, should you call and cancel the card? Explain.

No, because it can lower your FICO score. Instead you should cut it up. or make a charge on it like once a year

What are two things that will positively affect or have no effect on your FICO score?

Soft inquires and paying bills on time

How does a pay day loan work?

You go in, request a loan (usually $500 or less), you write them a check plus fees. It has high interest and once you get your next paycheck, you must pay off the loan fully first

What is an installment loan and give an example?

a loan paid n increments (yearly or monthly) Ex. house or car loan (secured)

Closed-Ended Credit

a loan that must be paid in full by due date

What is creditworthy?

a person or company that is able to receive credit because they are reliable to pay back

Line Of Credit

a pre-established amount that can be borrowed on demand without collateral

What are two disadvantages of credit?

overuse of card and complex fines and fees

What is a balance transfer on a credit card and why would you want to do that?

part of your debit that you owe to a lender is transferred to another card. to save money on interest repayments

Collateral

property pledged to assure payment of loan

Other than using a FICO score to grant you credit, what else might it be used for?

reports, better interest rates

What is the difference between a secured and unsecured credit?

secured credit is backed by cash deposit. unsecured credit has no collateral associated with it

What is the difference between a soft and hard inquiry?

soft= doesn't affect your score/report. hard=effects you

What is a cosigner?

someone who guarantees that if the borrower cannot pay back, they will be legally responsible to pay it back.

How does collateral help assure repayment of a loan?

taking away property until the owner pays it off (owner wants property back)

APR

the cost of credit, expressed as a yearly percentage

Why must all lenders calculate APR in the same way?

to compare them

How does the CARD act affect you as a high school student?

we can't get our own credit card until the age of 21