Chapter 18: Consumer Credit

A company that gathers information about credit users and sells it to businesses that offer credit is called a

credit bureau

A maximum amount you are allowed to owe at one time on your credit account is called the...

credit limit

A company that attempts to obtain money that is past due is called a

debt collection agency.

Anyone who buys on credit is called a(n)

debtor

A payment of part of the purchase price of a product or service is a(n) ______________ payment; it usually made at the time of the purchase.

down

credit

is the privilege of using someone else's money for a period of time.

Which of the following require disclosure of the APR?

loan credit agreements and sales credit agreements

The date on which a loan must be paid is the

maturity

cosigner

of a note is responsible for payment of the note if you do not pay as promised.

Which of the following is a disadvantage of using credit?

overbuying

People who need a small amount of money for a short time sometimes use ________________________ loans, a type of cash advance with extremely high interest rates.

payday

The amount of a loan is called the

principal

A written promise to repay based on a debtor's excellent credit history is a(n)

promissory note.

This type of charge account requires the buyer to make full payment within a stated period.

regular charge account

If you cannot pay your bills, you should never

respond to an advertisement claiming to "erase bad credit—100% guaranteed."

credit report

shows the debts you owe, how often you use credit, and whether you pay your debts on time.

of account is a record of the credit transactions completed during the billing period.

statement

This type of credit occurs when a company receives goods from a supplier and pays for them later.

trade credit

A statement will report all of the following information EXCEPT

whether the item was purchased on sale.

A person's ability to pay a debt when it is due is called

capacity

Which of the following will NOT help you to establish a good record of creditworthiness?

changing jobs frequently

finance

charge is the total dollar cost of credit including interest and all other charges.

of a note is responsible for payment of the note if you do not pay as promised.

cosigner

Which of the following is NOT one of the "three Cs of credit"?

creativity

The Truth-in-Lending Law limits your liability to ____________________ for unauthorized credit card purchases made prior to notifying the card issuer.

$50

To make the computation of interest easier, a year is often considered as...

360 days

This regulation requires credit bureaus to delete any information dealing with a personal bankruptcy that is more than ten years old.

Fair Credit Reporting Act

A creditor is a business or individual who is willing and able to provide information about your creditworthiness.

False

A person's reputation for paying bills on time is known as collateral.

False

It is illegal for a state or local government to purchase goods on credit

False

People who use affinity cards are usually expected to pay the full balance each month.

False

The Consumer Credit Reporting Reform Act places the burden of proof for accurate credit information on you rather than the credit reporting agency.

False

Which of the following is NOT a provision of the Equal Credit Opportunity Act?

It prevents creditors from looking into your creditworthiness.

Which of the following is an example of a bank card?

MasterCard

Simple interest =

P × R × T

The legal process of reducing or eliminating an amount owed is called

bankruptcy

allows you to withhold payment of any balance due on defective merchandise.

The Fair Credit billing act

An installment loan is one in which you agree to make monthly payments in specific amounts over a period of time.

True

If you borrowed $100 for one year and paid $110 at maturity, the interest rate you paid would be 10 percent.

True

The Federal Trade Commission reports that credit card fraud is a major problem.

True

The cost of using someone else's money is called interest.

True

The date on which a loan must be repaid is the maturity date.

True

This regulation requires that you be told the cost of credit before signing an agreement.

Truth-in-Lending Law of 1968