Lesson 1 Beware of
Credit and Debt
Credit and Debt
Money owed to another person or company
What is debt?
Very high interest rate lenders
What are predatory lenders?
A statistical number used to represent a consumer’s creditworthiness
What is a credit score?
A charge to your credit Card that is paid yearly
What is an annual fee?
This is the total amount of the loan: the cost of the car plus any taxes and fees
What is the principal?
List your debts in order from smallest to largest
What is the first step of the snowball method?
Money owed to someone or a company.
What is debt?
An offer to borrow money
What is credit?
something owned (that has value) offered as security on a debt; if the debt is not repaid as agreed, the item is forfeited to the lender
What is collateral?
A company that collects credit rating information and makes it available to creditors
What is a credit bureau?
Many people believe credit cards are necessary
What is a Credit Card Myth?
Pay cash for your car
What is the 3rd foundation?
Save a $500 emergency fund
What is the first foundation?
A credit that automatically renews whenever an amount is paid to decrease the debt.
What is revolving credit?
A credit card marketing tactic that gives you a small percentage of money back for every dollar you spend
What are cash back rewards?
Loans offered to students
What are student loans?
The two main types of credit inquiries
What is hard and soft?
A fee for a loan you take from from a credit card that is similar to an ATM
What is a Cash Advance Fee?
The most expensive way to purchase a vehicle.
What is to lease?
Every time you pay off a debt, add the amount you were paying on that debt to your next debt payment.
What is the third step of the snowball method?
The extra expense a lender charges you for borrowing their money.
What is interest?
A credit card marketing tactic where you only have to pay the least amount required by the credit card company.
What is minimum monthly payment?
credit that automatically renews whenever a payment is made to reduce the debt
What is revolving credit?
This category makes up 35% of your credit score
What is debt payment history?
Everytime a Credit Card is used the credit card company charges the store this fee
What is a Merchant Fee?
this is an additional cost or penalty your lender charges you for letting you borrow their money
What is interest?
To get out and stay out of debt
What is the second foundation?
a business that gathers credit rating knowledge and makes it known to creditors
What is a credit bureau?
A credit card marketing tactic that is temporary
What is a Zero-Interest Introductory Rate?
the increase in value of a home over time; the difference between the amount owed and what the home could be sold for
What is equity?
The company that developed the software that calculates a person’s credit score
What is the Fair Isaac Corporation?
This shows smiling people and advertises free rewards
What are Credit Card marketing tactics?
2 main ways to finance a car
What is direct financing and leasing?
Quit borrowing more money, use the debt snowball method, and start saving money.
What are some steps to stay out of debt?
The amount of time, in months, that you'll be making payments
What is a term?