Credit Basics
The ability to borrow money or access goods or services with the understanding that you'll pay later
credit
A card issued by a financial institution that allows the holder to borrow funds to make purchases
How can you build credit?
You can build credit by opening a credit account, using it responsibly, and making payments on time
What happens if you miss a payment?
Missing a payment can result in late fees and a negative impact on your credit score.
What allows you to predict of your credit behavior, such as how likely you are to pay a loan back on time
Credit score
What are sums of money that are borrowed and expected to be paid back with interest over time
Loans
What is the importance of paying bills on time?
Paying bills on time is crucial for maintaining a good credit score and avoiding late fees.
What is a penalty charged by the bank when a payment is made after the due date
True or false: The higher your credit score the better
True
A specific type of loan used to purchase real estate
Mortgage
True or False: Borrowing a lot of money at once builds your credit score
How can bad credit affect you?
Bad credit can lead to higher interest rates, denied credit applications, and difficulty renting homes or getting certain jobs
What is the purpose of a credit?
to allow individuals to purchase goods and services now and pay for them later
What is the difference between a loan and a mortgage
A loan is more flexible and general where lenders provide funds where as mortgages is typically used for purchasing real estate, like a house
True or False: Borrowing a lot of money at once is bad for your credit score
True
True or False: A good credit score can be an indicator of responsible behavior, showing that the job candidate can be trusted around money and other sensitive information.
True
How many factors determine your credit score?
5
Bonus-refers to the original sum of money borrowed in a loan
"Principal"
True or False: Paying off your bills on time and in full is very important
True
True or False: A bad credit score can signal potential for irresponsible behavior and overall untrustworthiness.
True