Vocab
What is the definition of credit?
Using someone's money for a price.
Which of the 5 C's deals with the integrity of a person?
Character
Whats does Fair Credit Billing Act mean?
Creditors must resolve billing errors within a specified period of time.
Name the types of credit?
Open-ended Credit, Closed-end Credit, and Service Credit.
Where do you want your FICO score to be at?
740
Information gathers from creditors and landlords are use in...?
Credit Reports
Which of the 5 C's deals with net worth?
Capital
This act gives the consumer the right to see what's on their file.
Fair Credit Reporting Act
What do interest and finance charges represent?
The cost of credit
Applying for loans and additional credit cards, Paying bills late, Filing for bankruptcy, Amount of outstanding debt (your debt to income ratio),Ability to pay bills in full and on time
Amount you must pay each month to avoid additional fees.
Minimum Payments
Which of the 5 C's deals with assets used to secure debt?
Collateral
What does the Equal Credit Opportunity Act do for consumers.
Credit cannot be denied because of religion, national origin, race, gender, or marital status.
What are two disadvantages for using credits?
Finance charges/fees, Interest, Accumulating debt, Can negative impact your credit score
Give three examples of practices to better to your FICO score.
Pay bill in full each month to avoid finance charges and interest, Do not lend card to friends, Pay early to avoid fees, Compare credit card offers, Understand the cost of credit
What does FICO stand for?
Fair-Isaac Corporation
Which of the 5 C's deals with the borrower and overall economy?
Conditions
Which act requires lenders to fully inform consumers about all costs of credit.
Truth in Lending Act
Name three sources of credit.
Banks/Credit Unions, Finance companies (avoid), Credit card companies, Mortgage brokers/lenders, Auto-finance companies, Retailers (furniture stores), Payday Lenders (avoid), Pawnshops, Tax preparers, Government agencies, Colleges
True or False: Credit limit, Minimum payment, Maximum payment and Late fees are all things place on credit cards
False
What is secured and unsecured loans? Give an example of each.
Secured Loan: the lender can take possession of the collateral if you don't repay the loan. i.e car loan, mortgage loan.
Unsecured Loan: is not protected by any collateral; the lender can not take away you possessions. i.e credit cards, student loans.
Which of the 5 C's deals with the sufficient money to pay for obligations?
Capacity
Prohibits the use of threats, false and misleading statements to intimidate the consumer into payment.
Fair Debit Collection Practices Act
What are some things to consider when applying for a loan?
Can the consumer afford the monthly payments, need vs wants, fees, costs lender reliability, debt-to-income ratio and need for a co-signer.
Give two ways to avoid Bankruptcy.
Pay on time; more than the minimum payment or the balance in FULL,CALL all creditors,Close unnecessary credit card accounts, Notify credit card companies immediately when faced with payment problems, Seek assistance through government/community agencies