Credit Unit

List and describe two reasons why credit costs may vary.

Credit costs may vary because of the different interest rates and the different type of credit or loan.

What are two creditors' responsibilities to you?

Creditors must make credit records available and fix mistakes and inform customers about rules and regulation.

What is open end credit?

Open end credit, like credit cards, means that the borrower can spend up to a certain amount and there is varying payment depending on how much you spend.

What is service credit?

Service credit, like telephone and utility bills, means that service is provided in advance and you pay later.

List and describe two advantages and two disadvantages of credit.

Two advantages of having credit are that it expands your purchasing power and raises your standard of living and is convenient. Two disadvantages of having credit include that the purchases cost more over time and it can lead to overspending.

What are two sources of credit?

Two sources of credit include retail stores and credit card companies.

What is a usury law?

Usury Laws are regulations governing the amount of interest that can be charged on a loan. Specifically, it targets charging high rates on loans by providing a maximum amount of interest.

What is the difference between a FICO score and a Vantage or Transrisk score?

Vantage and Transrisk score is not used commonly, but the FICO is your legitimate credit score used by banks.

What is a credit freeze and when might you chose to ask for one?

A credit freeze is a method by which a consumer can limit access to his or her credit report to companies. You might chose to ask for one if you're concerned about identity theft or someone gaining access to your credit report without permission.

What is a credit report, a credit score, and a credit rating?

A credit report is a detailed report off an individual's credit history prepared by a credit bureau and is used by a lender to determine your creditworthiness. A credit score is a single number that lets creditors know whether or not you have good credit. A credit rating is an estimate of the ability of a person to fulfill their financial commitments, based on previous dealings.

What is closed end credit?

Close end credit, like a car loan, is a loan for a stated amount that must be repaid in full by a certain date. There is a set payment amount every month.

What is the Office of the Comptroller of the Currency?

The Office of the Comptroller of the Currency is the government agency that regulates banks and makes sure they are following all laws and rules.

What are the components of a FICO score?

The components of a FICO score are the outstanding debt, length of credit history, pursuit of new credit, types of credit in use, and payment history.

Who can limit the interest rates and fees that credit card companies can impose

The credit companies can choose what they cost, but the government passes laws that regulate these fees.

What are the five c's of credit worthiness?

The five c's of credit worthiness is character (will you repay the debt?), Capacity (can you repay the debt?), Capital (Do you have sufficient assets to support the debt?), Conditions (What affects your ability to pay the debt?), and collateral (What assets are pledged to support the debt?).

Consumer Credit Protection Act

This law created standardized requirements that must be followed by all consumer lenders such as banks, credit card companies and auto-leasing firms.

Fair Credit Reporting Act

This law gives you the right to have inaccuracies fixed in a timely manner and the right to sue and seek damages for violations on your credit.

Fair Credit Billing Act

This law protects consumers from unfair billing practices and provides a method for addressing billing errors.

Fair Debt Collection Practices Act

This law protects the right of consumers to sue debt collectors for violating the law, protection against harassment and threats, and the privacy of your debts.

Equal Credit Opportunity Act

This law protects you from unfairness when applying for credit.

List and describe three sources of credit advice.

Three sources that have credit advice include newspapers like the Wall Street Journal, financial magazines like Forbes, banks, or family and friends.

List and describe three of the ways a person can qualify for credit.

Three ways a person can qualify for credit include having an income, financial position based on capital, and collateral.

What steps should you take to build credit?

To build credit, individuals should acquire and positively manage small lines of credit. You should get a credit card with a cosigner, acquire a small loan from a depository institution, and obtain a secured credit card.

What are two ways you can avoid unnecessary credit costs?

You can avoid unnecessary credit costs by paying with cash for small purchases and paying more than the minimum payment

What is one way you can protect your credit card?

You can protect your credit card by only carrying cards you need and telling your creditors if your card is lost or stolen.

What is one way you can protect your credit card online?

You can protect your credit card online by not responding to email requests for private information and making sure the site is secure before entering your credit card number.