Personal Finance Chapter 17

loan for a specific amount that must be repaid in full,including finance charges, by a due date

Closed-end.

Credit reports are issued by:

Credit Bureaus

Collateral refers to financial assets you possess that are worth more than your debts.

False

Credit reports are issued by

credit bureaus

Credit bureaus gather information from businesses, called _____, that pay a monthly fee

subscribers

Which of the following could become part of your credit record?

A. Bankruptcy B. All of these C. Lawsuit D. Divorce

In many cases, people with poor credit ratings have:

A. Filed for bankruptcy B. Missed some monthly payments C. Failed to pay back debts D. All of these

Which is NOT one of the five C's of credit?

Challenge

Responsible attitude toward honoring obligations,judged on evidence in a person's credithistory

Character

Which of the 5 C's of Credit does the question "Will you repay the debt" pertain to?

Character

Someone who promises to pay if the borrower fails to pay.

Co-signer

This law requires lenders to fully inform consumers about all costs of a credit purchase before an agreement is signed.

Consumer Credit Protection Act

law requires lenders to inform consumers about all costs of a credit purchase before signing.

Consumer Credit Protection Act

The use of someone else's money borrowed now with the agreement to pay it back later.

Credit

A consumer request requiring the credit bureau to deny all access to a consumer's credit information or files is called:

Credit Freeze

Complete record of your borrowing and repayment performance that helps creditors determine your ability to pay new debts.

Credit History

Measure of creditworthiness based on analysis of your credit and financial history.

Credit Rating

Written statement of a consumer's credit history, issued by a credit bureau and updated continuously. Requested for credit and employment applications and insurance reasons.

Credit Report

Based on a point system that tells potential creditors the likelihood you will repay debt as agreed.

Credit Score

This law was designed to prevent discrimination in the evaluation of creditworthiness.

Equal Credit Opportunity Act

Act that allows you to see your credit file at no charge within 30 days of a credit denial.

Fair Credit Reporting Act

Consumer Credit Protection Act prevents discrimination in the judgment of creditworthiness.

False

Credit inquiries made with a permissible purpose will still count against your credit score.

False

Once credit is established, most people should plan on having at least 8 to 10 credit cards.

False

Time frame within which you pay your balance in full & incur no interest charges.

Grace Period.

Type of credit whereby you can add purchases up to a set credit limit.

Open-end

Which of the following would be a good first step in getting started with credit?

Opening a savings account.

A measure of creditworthiness based on an analysis of your credit and financial history

Rating

A written statement of a consumer's credit history

Report

Credit bureaus gather information from businesses, called __________________________, that pay a monthly fee to the credit bureau.

Subscribers

A line of credit is a pre-established amount that can be borrowed on demand without collateral.

True

If you are denied credit based on a credit report, inaccurate information in your file may be the cause.

True

Most credit cards are revolving credit agreements.

True

Secured debt is tied to a specific asset that can be used as collateral & repossessed.

True

Two major classifications used to evaluate consumer's creditworthiness are credit rating and credit score.

True

Known for its provisions requiring full disclosure of all costs in a credit purchase before an agreement is signed. Also known as Consumer Credit Protection Act, and limits consumer's liability to $50 after reporting a credit card lost or stolen.

Truth-in-Lending Law

State law that sets a maximum interest rate that may be charged for consumer loans.

Usuary Laws

The financial ability to repay a loan with present income.

capacity

The value of property you possess after deducting your debts

capital

Property pledged to assure repayment of a loan, such as a house

collateral

A person who borrows money from others.

debtor

The rating for a person who usually pays during the grace period, but occasionally takes longer.

fair

The total dollar amount of all interest and fees you pay for the use of credit is called

finance charge

A legal business that makes high-interest loans based on the value of personal possessions

pawnbroker